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Mortgage renewal tips

Dec 18, 2013

By law, banks have to send you a renewal notice at least 21 days before the end of your present term.

Canada's big lenders will contact you months before to reduce the odds of you shopping around and locking in on a rate which usually includes a premium.

If the premium is only .10 basis points and you want a five year term, this is worth considering.

If your lender is offering a one-time only opportunity but the premium is .30 basis points this may not be as attractive. as .30 has been a rare increase over a 90 day period.

To minimize rate risk fixed rate borrowers should take at least a 90-120 day rate hold.

Unless you believe that interest rates are going to go up significantly prior to locking in then an early renewal with a premium is probably not your best choice.

Remember that it is often advantageous to the big lenders if you commit to a rate in advance with a premium and will not benefit if the rates go down during this time period.

Adapted from Robert McLister (Globe and Mail)