Mortgages – Renewal Time and Mortgage Planning

Mortgages – Renewal Time and Mortgage Planning

Check out this great reminder from Peter an Andre from Mortgage Architects…


There must have been a spike in new mortgages about five years ago.

Recently, we have noted a surge in enquiries about the best mortgage renewal options and strategies. Just like when getting a new mortgage, the decision on how to address a mortgage at renewal can be daunting. As a mortgage due date nears, there is a window of opportunity to revisit one’s entire financial situation and determine how a new mortgage can complement one’s financial well-being.

Currently, the mortgage retention teams at all lenders are very aggressive. The mortgage market is a very competitive space, and Banks and Trust Companies are focusing much of their resources into keeping other predatory lenders away from their borrowers.

The confusion usually begins when a lender reaches out with an “early renewal offer”… meaning there are no discharge penalties to negotiate a new mortgage with them before the actual existing mortgage comes due. This tactic ensures their borrowers can’t possibly explore “A Better Mortgage Plan” elsewhere!

Keeping in mind that most lenders’ biggest fear is an informed consumer, do not agree to a mortgage renewal until you “pause”, and do some research. Typically, a lender entices you to renew early with no questions asked and a low interest rate, which is actually a good start.

Having said that, there’s so much more to a mortgage than the best rate, which may only save you a couple of hundred dollars a year. There is such an excellent range of dynamic mortgage products and options that all of us should endeavour to save a couple of thousand dollars a year on our next mortgage.

Studies clearly indicate that mortgage borrowers’ biggest concerns are terms, policies and conditions of their mortgage, and not the actual interest rate itself… the devil really is in the details so be aware! Generally speaking, most are hoping to graduate to a “Mortgage & Line of Credit Combo” which is effectively the pinnacle of inexpensive and flexible financing.

So what is a “Good Mortgage Plan”?… Every borrower’s needs and expectations vary so there is no right or wrong choice. Prudent mortgage planning should include a certified financial planner (CFP), an accountant (CGA), and a mortgage planner (AMP) so together the team customizes a “Mortgage Plan” tailored to your needs. The collective goal being to set up the right mortgage the first time to avoid unnecessary future visits to lenders and lawyers.

The right mortgage should cover all potential unexpected scenarios. It is a matter of positioning one’s mortgage to insulate against job loss, allow for retirement investment opportunities, fit within a budget, and is optimize tax efficiency. It is critical to get unbiased advice from reputable sources. I advocate you review blogs, google and reach out to us to get all your questions answered before you renew.

Again, once you renew your mortgage, it is difficult and/or expensive to make mortgage changes before your next renewal date.

Finally, globally it appears 2012 will be a weak economic year compared to 2010/11. Even though no one can predict the future, one has to assume that interest rates will gradually creep up as inflation slowly takes hold… this bodes well for taking a variable rate mortgage even when factoring in this likely gradual interest rate increase.

Conversely, fixed rates are bouncing around weekly and are very unpredictable right now. They are based on a currently volatile Bond market that has been changing week to week and is significantly influenced by European economic woes, a large US debt, and the strength of the Canadian dollar.

In my opinion, I would stay away from a fixed mortgage rate for the time being. As the situation unfolds, I am committed to keeping everyone on our distribution list abreast of the next best mortgage move… when it comes to saving money we won’t let you miss a thing!

Let us help anyone who is in doubt on what “Mortgage Plan” is best!

Let’s connect soon… Peter, Andre & team.

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