The banks are betting on you falling for this mortgage renewal trap…
You get an envelope or email from your lender, a rate, a signature line and a deadline. It’s a mortgage renewal letter designed to feel like a form to complete rather than a decision to make.
But what if taking an extra week or two to sign, means finding a cheaper option for your next term?
Related Read: Mortgage Traps to Watch For
Most people don’t look
A Royal LePage survey released last month found that 49% of Canadians renewing expect to simply stay with their current lender. Only 44% plan to compare offers first.
The same survey noted something else: among homeowners expecting a higher payment, 76% said it would put financial strain on the household, and more than half said they’d cut back on spending to manage it.
Reading between the lines: A lot of people are prepared to cut their own household spending before they’ll spend an afternoon comparing lenders.
What this means for you at mortgage renewal time:
Same mortgage, just cheaper.
Lenders don’t need to apply the stress test to uninsured straight switches at renewal.
A straight switch means you move your mortgage to a new lender with the same balance and the same amortization.
Related Read: Our complete mortgage renewal guide
Good to know:
Individual lenders can still apply their own qualification standards even where OSFI doesn’t require it.
If you want to pull equity out or extend your amortization, it isn’t a straight switch and different rules apply.
This is your sign
Get in touch with our mortgage experts to know if a switch makes sense at renewal time.