Loyalty Means Nothing at Renewal Time

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Do you own a cell phone? Remember how many incentives there were when you got it, how great of a deal it was? Remember how ripped off you were 6 months later when an even better deal came out and was offered to "new contracts only"... Sometimes mortgages are a lot like cell phones.

A great piece called "Mortgage loan renewals: Why loyalty may not pay Canadians" showed up this morning in thestar.com personal finance section. I figured I would highlight some of the better points and outline in real numbers some of the findings.

First Time Homebuyers

First Time Homebuyers are more willing to use the Internet and social media to shop around for a mortgage and have less loyalty to a single institution, which seems to be paying off. In a study called "Discounting in the Mortgage Markets" we find this quote "Lenders are willing to offer discounts to younger borrowers in return for future expected profits". So with 40% of First Time Homebuyers using a mortgage broker to help them secure mortgage financing it is clear they are getting taken care of, it is interesting to contrast that with only 25% of other Canadians use the services of a broker.

Shop Around at Renewal Time

President of CAAMP, Jim Murphy is quoted in the article talking about renewals:

"Your lender sends you something in the mail, you've paid off some principal, the rate looks pretty good, so you say OK." "But you should shop around. Just because a bank offers you a rate doesn't mean it's the best one." Jim Murphy

And the facts back it up. According to the above mentioned study, brokers "are a significant factor driving discounts" reducing the cost of a mortgage on average by 17.5 basis points. Ex. That would be the difference between 4% and 3.825%.

Economists found that people who switch banks get a better deal than existing customers

Switch Your Mortgage

If your mortgage is up for renewal here shortly, please consider giving us a call, we would love to work through all your options with you. There is absolutely no cost in talking with us, and there is actually no cost in switching the mortgage. We have lenders that will not only offer you a lower interest rate than your existing lender, assuming you are not adding any money to the mortgage, they will actually cover the legal fees to make the switch possible.

Your lender has no interest in making you the best offer on renewal, they want to charge you as much as possible, that is how they make make money! Why not shop around with us, we can arrange financing with a lender who will offer you their best rate to earn your business. Its certainly worth having the conversation!

Not all mortgages are created equal, let us help you find a mortgage that pays off faster!


I am wearing a kilt right now. I have consumed coffee today. Family Man. Innovator. Follow me on Twitter @kiltedbroker | Formerly the Executive Editor of the First Foundation #OwnGrowProtect…

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