Mortgage Renewal Time

Posted by under Guest Posts, Mortgages


Why Aren’t More Canadians Taking Advantage of their Opportunity to Negotiate Lower Rates?

Though the majority of Canadians shop around, use online mortgage calculators and compare mortgage rates when they set out to secure a mortgage on their initial property purchase, less than 40 per cent will do the same when it comes time to renew that financing.

It’s a common mistake; homeowners receive their renewal notice in the mail, leave it on the back burner and when they run out of time, will renew to the terms their bank set out without having explored their options. Even when the renewal rates are higher than what the homeowner was previously granted, homeowners are still not likely to shop around. Why is that?

There are two common misconceptions that homeowners will most likely let cloud their renewal time decision. Misconception number one: the process will be expensive. The cost involved in a mortgage transfer can actually be quite minimal:

  • Discharge statement fee: Virtually all major banks and lending institutions will charge a fee to discharge your mortgage if you opt not to renew with them. This fee generally ranges from $150 to $300.
  • Appraisal fee: Many mortgage products, including a variable rate mortgage or a Home Equity Line of Credit, will require the lender to ascertain the current market value of your property. However if an appraisal is involved to transfer your mortgage, the lender should cover this cost and arrange the appraisal for you.
  • Legal fees: This is the largest expenditure a mortgage transfer could generate. However, with a direct mortgage transfer through CanEquity, no legal fees will be necessary unless a mortgage refinance is involved. In this case, the new terms of the mortgage will need be legally registered. Lawyer fees will usually run from $600 to $1,500 on average.

Misconception number two: there won’t be enough time to shop around and switch. Renewal notices often come at the last minute, and that is usually done on purpose. In actuality, it only takes a few weeks for an independent mortgage broker to get your mortgage transferred to another lender. However, if you can have your application for a mortgage renewal in four months advance, the best rate available within that timeframe can be secured up to your transfer date. The broker will do all the shopping for you.

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