I had an fascinating conversation with a mortgage broker the other day about renewing current homeowners renewing their mortgages, and what he had to say, SHOCKED me! He gave me some statistics that the Canadian Mortgage and Housing conducted and I couldn't believe it.FACT #1: 89% of homeowners remain with the same lender.
FACT #2: 68% of homeowners just accept the renewal from their current lender.
So what is the problem? The original lender must be offering the best rates, right? Sadly, the answer is likely "no".
Often, the original lender will offer you a "much better rate" as a "preferred customer" for your loyalty to the company and will be able to save you tremendous savings from the posted rates. This is all true, but they can do better.
This can be best illustrated with an example:example: $250,000 mortgage, 5 year fixed term, 25 year ammortization, paid monthly
The lenders "posted" rate may be 5.29%, which is quite common in January 2012. As a cherished and preferred customer, they might offer you a rate of 3.79%. WOW! Where do I sign!? Right?
Hold on! The problem is that an even better rate can be easily obtained, and it only takes a phone call to a mortgage broker.
In January 2012, rates of 3.29% can easily be found, through more than one lender. Yes, HALF a percent difference than your "preferred customer" rate. So you might be thinking, does it really make a difference? Here's the math:
Rate 3.79% 3.29%
Monthly mortgage $1286.75 $1220.63
Monthly savings: $66.12
Five year savings: $3967.20
If you agree with me, you can contact me at GetStephen@live.com or at my office at 905-723-5944. I urge you to make a phone call to a local mortgage broker right away, especially if you are up for renewal soon.
The agent that inspired me to write this blog is John Greenlee at The Mortgage Centre. He can be contacted at jgreenlee@durhammortgage.com or at 905-436-8010.
Happy savings!
Stephen Young
www.GetStephen.com
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