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Before you sign that mortgage renewal offer, think carefully about your options

Before you sign that mortgage renewal offer, think carefully about your options
There’s a one-in-four chance that, if you’re among the 5.7 million Canadian households with a mortgage, you’re going to receive a letter in the mail this year telling you it’s time to renew.

TD Bank Financial Group said the number of renewals each year has climbed to 25 per cent as homeowners have switched to shorter terms, leading to more mortgages coming up for renewal every year.

“Traditionally, homeowners have gravitated to five years, that has been very popular,” said Pat Giles, associate vice-president, real estate secured lending, TD Canada Trust. “In recent years, we have seen the popularity of shorter terms emerge, the two-year terms, four years — meaning sometimes they (merge into the same renewal time) in one year like this.”

A 2014 report from the Mortgage Professionals Canada, which represents the mortgage industry, found 20 per cent of those customers coming up for renewal each year will switch lenders to seek a deal — something consumers are generally loathe to do because of perceived costs.

A better deal can include better terms, like large lump sum prepayment options, or it might mean just a straight out better rate. The difference can be meaningful: Discounted five-year closed fixed rates are as low as 2.3 per cent, but the posted rate at major banks is now closer to 4.8 per cent.

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