Did you know that:
– banks renew approximately 90% of the mortgages they hold?
-that the majority of those are renewed at posted rates?
When you stop to think about what the difference is between a posted rate and a discounted rate, it can be shocking! If the posted rate for a 5 year mortgage is, for example, 5.39% and the discounted rate for the same term is 3.89% – that’s a difference of 1.5%. Put that into a dollar amount on a $250, 000 mortgage amortized over 25 years, the difference is about $18,000 in interest over the next five years. That’s a pretty big difference if you ask me!
I think it is pretty safe to assume that the average person wouldn’t mind saving $18,000. (That could certainly buy a lot of squeaky toys for some very spoiled dogs at my house!) So, the logical question to ask yourself now would be how YOU can save money on your mortgage renewal. Solution – don’t sign that mortgage renewal letter just yet.
It would be worth your time to sit down with a mortgage professional and have them review your options. Remember – their knowledge goes beyond just rates. They will be able to discuss with you what the benefits of fixed vs. variable products are, what length of term would best suit your situation as well as what your best payment frequency would be. Have you had any recent changes in your finances or job? They will be able to answer any questions that you have regarding your current mortgage and your individual situation. They will provide you with quality information and help you to make an informed decision about your mortgage.