Why You Shouldn’t Just Sign Your Mortgage Renewal Letter

Every year, thousands of Edmonton homeowners receive a mortgage renewal letter from their bank. They glance at the rate, sign it, and mail it back. It feels simple, and it feels safe. However, I spent ten years inside the banking system. As a result, I can tell you that auto-renewing is often a costly mistake most homeowners never notice.

Here is what that letter isn’t telling you.

The renewal rate is rarely the best rate

The rate on your renewal offer is usually not the sharpest one your lender can give. Instead, it is the rate they hope you will accept. Lenders count on convenience, because they know most people sign rather than shop around. Therefore, the opening offer often has room in it. If you simply sign, you may leave real money on the table.

Your situation has probably changed

A renewal is not just a rate. In fact, it is an opportunity. Your finances have likely shifted since you first got your mortgage. For example, your income may have grown, your credit may have strengthened, or your property value may have risen. Each of these can open doors to better options. However, your renewal letter does not account for any of it. After all, that letter is generated automatically, so it is not tailored to who you are today.

Renewal is the ideal time to rethink your mortgage

Signing the renewal keeps you exactly where you are. However, this is actually the easiest time to make your mortgage work harder. For instance, you might consolidate higher-interest debt or adjust your amortization. Alternatively, you may want to access equity for a renovation or investment. You could even change your payment structure to better fit your life. Yet none of that happens if you renew as-is.

Shopping your renewal is easier than you think

Here is what most people do not realize. Comparing your options across lenders is not a burden. As a mortgage associate, I do that legwork for you. Rather than accepting one offer from one bank, I present your file to a range of lenders. Then I bring the competitive options back to you. As a result, you stay in control, and you simply have more to choose from.

What to do before you sign

Do you have a renewal coming up in the next few months? If so, start the conversation early. Ideally, reach out well before the deadline on that letter. That way, we have time to review your mortgage and understand your goals. Together, we can then explore whether staying put or making a change serves you better. Sometimes the answer is to renew. Nevertheless, you deserve to decide with full information.

Your mortgage is likely the largest financial commitment of your life. Therefore, it is worth a second look before you sign.

If your renewal is approaching, I would be glad to review your options with you. There is no obligation, so reach out any time.

Harjeet Singh, Mortgage Associate
Dominion Lending Centres Brokers for Life