Renewing in a High-Interest Environment
As many people are aware at this time the Bank of Canada has yet again raised the key interest rates bringing it up to 4.25% on the year. This marks the 7th increase in rates for the current year from the bank of Canada.
In response to this, institutional lenders have had to raise their term interest rates to keep up with the rising cost of borrowing from the Central Bank. Therefore, many borrowers are receiving notices for their mortgage renewal at a much higher interest rate than they may have been expecting in the last 10-15 years.
The Mortgage Process
If you are a first-time home buyer, you may not be familiar with the mortgage process in Canada. Mortgages are separated into terms that are offered and agreed upon between lending institutions and borrowers.
At the end of your mortgage term, you have either the option to pay your mortgage outright, or if you are on good terms with your current lender, you will be able to renew your mortgage with different options that may be offered by them.
Interest Rates Are on the Rise and so is Your Renewal
Many borrowers that purchased homes within the last 5 years notice that the interest rate being offered on their renewal is far higher than they were previously locked in for. This increase creates an increase in your mortgage payment. Those that entered the market when prices were on the increase are noticing lower cash flow and performing money management to keep up with their new, higher mortgage payment.
Read more: When Mortgage Rates Increase
Not Being Offered the Best Rate?!?
Many clients do not realize that their financial institution has no obligation to offer a borrower their “best” interest rate. More often than not, it’s easier to simply sign back your renewal with your current company and have peace of mind. Now, more than ever, clients should seek as much knowledge as possible when they receive their renewal notice.
A mortgage broker is a professional that is closely following the mortgage and banking industry all over Canada. Getting a second opinion on whether your current lender is offering a product that fits your needs and makes sense in the overall market offerings. A mortgage broker can offer a sound assessment of your current situation and either give you peace of mind in knowing that your current lender is offering the best solution for you as a client or will assist in getting a new scenario lined up that matches your goals and future.
Book a 15-minute introduction call and chat with a licensed Mortgage Suite Broker today!
