Mortgage Refinancing Facts
“Do You Consider Your Mortgage Refinancing Choices Carefully At The Time Of Mortgage Renewal?”
Mortgage refinancing is not an action restricted to those that either require additional funds from their property or those that are required to find a new mortgage provider.
The reality is that every time a mortgage interest term is coming to its end, mortgage renewal with the existing lender as well as mortgage refinancing with potentially a new lender is something that should always be considered.
The reasoning here is that, depending on who’s statistics you adhere to, mortgage lenders renew about 80% of their existing mortgage portfolio. Or put another way, of the accounts that are paying on time and have not provided any repayment for the lender, the level of renewal is extremely high.
So while getting the renewal is a very important business activity for mortgage lenders, the renewal process is not necessarily approached as a way to renew the customer for their continued loyalty.
In fact, most mortgage renewal offers provided by mortgage lenders to their existing borrowers offer the bank or institutional lender’s posted mortgage interest rate.
This is typically not the best rate that the lender is prepared to offer, but its the starting point for the renewal process.
In most cases, the mortgage holder will sign the renewal for potentially a higher than market interest rate, and continue on with the lender for a further interest term.
Being open to mortgage refinancing is simply developing a mind set that your goal when committing to a new interest term is to get a market rate for your particular situation. Being that everyone’s property, level of income, and credit profile are going to be different, what’s best for one borrower is not necessarily going to even be available for another.
That being said, when you get to renewal time, it makes a great deal of sense to respond to the mortgage lenders offered renewal rates by asking them if they can quote a lower rate.
It also makes sense to go to the market place through an experienced mortgage broker and get competitive rate quotes as well.
And while costs are incurred to switch from one lender to another, the cost savings on interest can far outweigh the incremental cost of moving. Some mortgage lenders even pay for the transfer costs themselves.
After going through a market rate comparison, if you find that your current mortgage lender is prepared to offer you a proper market rate for your new mortgage term, then it likely makes sense to just stay where you are.
But the point here is that its up to the borrower to make sure the relationship stays equitable, otherwise you may end up paying a higher rate which over time can add up to a considerable amount of money that could have been used for other things, such as paying down the mortgage principal.
If you are going through a mortgage renewal process and want to discuss mortgage refinancing options, then I suggest that you give me a call so we can go over your situation and requirements together.
About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel