The large majority of Canadians who have renewed their mortgage in the past year saw their rate drop. Renewing Your Mortgage Should Save You Money!
A lower interest rate means that the interest portion of your payment goes down, other things being equal. This reduction in interest allows homeowners to either accelerate principal payments or it can provide more disposable income.
Either way, it’s good for the Canadian economy. Increased payments mean an increase in home equity and a reduction in debt levels. An increase in disposable income means a boost to the economy in the form of increased spending, or it could mean an increase in savings or debt reduction. Either way, it’s a good thing.
Many people blame the current low interest rate environment for fueling price increases in the real estate market, especially in larger cities like Toronto. However, it might well be the constant calls for rate increases that are in fact responsible for driving buyers to ‘get into the market while they can’.
The reported average rate negotiated by home buyers this year was 2.89% as opposed to 3.25% six months earlier
If you are renewing your mortgage in the next six months, you should end up with a lower interest rate provided you don’t blindly sign the offer to renew that comes in the mail.
Many people take the easy route and just sign on the dotted line for another term when they receive their mortgage renewal statement.
People who do this without reading the fine print usually get switched into a higher rate mortgage without knowing and end up missing out on the lower rates that are available had they only shopped around.
Renewing Your Mortgage is an opportunity to review all of the following:
- Mortgage rate
- Your monthly payment
- Term of your mortgage (how long this new mortgage agreement is for)
- Amortization period (how long before the house is paid for)
- Mortgage principal (do you need to free up cash from your equity)
Mortgage renewal time is a chance to make a big improvement in your financial situation just by moving into a better mortgage product.
Don’t fall asleep at the switch. If your mortgage is coming up for renewal in the next six months, email me firstname.lastname@example.org or call me at (800) 722-7172 before you sign your renewal offer! You could be very pleasantly surprised at how much money you can save.
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