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Time for mortgage renewal? Don’t just sign the form when it comes.
Oct 22, 2014
An article by Financial Post reporter Ted Rechtshaffen on why you don’t just sign the renewal form:
Prior to your mortgage being up for renewal, most financial institutions will send you a renewal form a month before. The letter asks you to pick an option and accept by signing your initials in the appropriate place and returning the agreement.
Here’s an example of what can happen: Mr. Rechtshaffen locked in 4 months earlier at another institution at 2.79% for 5 years fixed. The renewal agreement form his present bank offered 4.79% for 5 years fixed.
This 2% difference for a $500.000.00 mortgage would cost him $47600.00 over 5 years by simply “signing here” vs going to a mortgage broker a few months before.
Just to be sure he called his bank to ensure he had the proper instructions and rate on the renewal form.
Within seconds they offered him 2.99% for 5 years. They said the rate on the form at 4.79% was the standard rate.
That phone call would have saved $42,800.00 – valuable.
Many people just sign the renewal form. If a bank gets 5000 people in the $500,000.000 mortgage bracket to sign the agreement that adds $42.8 million in profit to their bottom line.
Please do not automatically sign the renewal form. If you are loyal to your financial institution shop around for the best deal for you and meet with someone in person from your current mortgage provider and ask for the very best rate that they give their very best customer.