Many people simply sign over the dotted line when their current mortgage lender sends them their renewal. It is usually a simple letter that conveniently comes around about 6 months before the mortgage is up for renewal.
It’s common to believe that since the client has been with the bank for the term and has made their payments regularly, they would automatically get the best rates. What can come as a shock to people is that their loyalty to their bank will not get them the best rate or service.
With a little bit of paperwork and a consultation with a mortgage broker, clients can make sure that they are getting the best rate. A recent client of mine had a renewal with a major lender and after 5 years of being great clients, the rates offered to them was 20 basis points over what that same lender was allowing our new applications to take advantage of.
So how much difference does a 0.20% difference actually mean to you and your money?
Here are a few mortgage scenarios based on a 25-year amortization.
| Fixed Rates | Variable Rates | |
|---|---|---|
| 1 year | 6.74 | x |
| 2 year | 6.09 | x |
| 3 year | 4.99 | x |
| 4 year | 5.09 | x |
| 5 year | 4.74 | 6.25 |
In conclusion, mortgage broker are loyal to their clients not their lenders and that guarantees you the best rate. Often the banks will lower their proposed rate once they realize that their client is shopping around. The question you should be asking is why should you go with a service provider that only offered their best service when they found out they are losing you.
