Don't Sign That Mortgage Renewal
GoMax Solutions - Content team
Apr 23, 2012 - 2:46:59 PM
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Today,
banks are doing a very good job of retaining their mortgage clients, in
fact they are renewing in the area of 80 to 90% of the mortgages they
hold. The problem here is the consumer is paying a price because more
than half of these mortgages are being renewed at posted rates. What
does this mean to the average consumer?
The posted rate today
for a 5 year mortgage is 5.44%, but the discounted rate for a 5 year
term today is about 3.29%, a difference of 2.15%. That may not seem like
a big deal... unless you crunch the numbers! On a $250,000 mortgage
amortized over 25 years that makes a difference of over $25,000 in
interest that you will pay over the next 5 years....ouch!
I
don't know about you, but if I could save $25,000 I would be pretty
happy. So how do you save this kind of money? I recommend you take
your mortgage renewal to a mortgage broker and get them to review your
mortgage. In fact, I think an annual mortgage review is a great service
that many mortgage brokers offer today. Think about it, most people
meet with their financial planner yearly to review that $50,000 RRSP,
but those same people often have much more owing on their mortgage and
leave it year after year, renewal after renewal really giving it very
little time or thought?
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