When it comes time for their mortgage renewal, most Canadians simply sign back the notice to renew their mortgage without investigating all their options. Studies show that approximately 94 per cent of Canadians sign back their notice of renewal on their existing mortgage and end up with a posted rate of interest instead of the bank’s best discounted offers. Why?
How many of you reading this would say, “I am an informed consumer who knows what mortgage products are available to me, what the best rate of interest is for the term I am looking to have, and I always do my homework when it comes to financial matters”? Maybe that’s why.
The banks certainly know why we do what we do. They spend large amounts of money trying to understand the needs and spending habits of their customers.
What they’ve found is that like many consumers, mortgage customers simply wait too long to start the search for a better deal, find they have little patience to shop around and believe their bank has always treated them well in the past. So, for most it comes down to convenience. It’s far more convenient to sign back that renewal notice than it is to shop around and compare options.
But are you spending far more on your mortgage than thenew mortgage customer? The new mortgage customer investigates all their options first. They investigate the products available to them. They investigate their options for mortgage lenders. They investigate the costs associated with that new home. Why? Because affordability matters to them the most now, when they’re at the start of a 25-year mortgage commitment. They know what the renewing mortgage customer has forgotten: to ask questions, seek the guidance of a qualified independent mortgage professional and compare offers.
Top 10 reasons why Canadians’ get a worse mortgage rate on renewal:
- They sign back the posted rate because they’re too overloaded with life/work/school to shop around for a better deal.
- They sign it back because they don’t know any better; after all, their bank has treated them well so far, right?
- They sign it back because the bank needs more money; with all this debt crisis stuff, perhaps they have to help the banks become more profitable than they are now.
- They sign it back because they left it too late to shop around for a better deal. “I think it renews next week.”
- They sign it back because “for the last 55 years I have always dealt with this bank!”
- They sign it back because they think “I have bad credit” or had past credit issues and no other bank with offer a better deal.
- They sign it back because they don’t know if there are better deals out there.
- They sign it back because “I don’t want to be inconvenienced. Time is money, after all!”
- They sign it back because they don’t understand the cost of borrowing at higher interest rates. “It’s only a difference of $25 a month; how much could that be in the long run?” ($25 x 60 months = $1,500 more!)
And the number one reason people sign back their mortgage at renewal with their banks is…
- Because they don’t know what a qualified mortgage professional can do for them!
A qualified mortgage professional can save you money, time and the need to shop around. They offer one stop, no shopping, no haggling, and no fees! That’s what qualified mortgage professionals do best.
Audrey Wamboldt is a veteran mortgage specialist with Dominion Lending Centres in Burnside. She can be reached at (902) 444-4343 or visit her Web site at www.audreywamboldt.ca.