When your current lender sends you a mortgage renewal notice in the mail, they most likely will quote you some rates that are available to you. A good question is: are those rates the best rates available? You have always paid your mortgage as agreed and never caused any problems so why shouldn't it be the best rates. The best adage is the old adage "Buyer Beware". Know what you are getting into.
A study completed in 2011 by the Bank of Canada called "Discounting in Mortgage Markets" raises some interesting issues like "loyal customers pay more". If you have a long relationship with multiple products/services at your bank; your bank would feel you are less price sensitive and less likely to move your banking needs elsewhere and in turn charge you more. On the other hand new clients received a rate discount of 10 bps more than an existing client; so blind loyalty can be expensive. The report went on to say that shopping around will save you money and if you use the services of a mortgage broker you would save an additional 34 bps than if you negotiated on your own.
The best advice is to find what the best rates are, and what your credit rating is about 3 to 4 months before your mortgage is up for renewal. This way you are prepared for any changes and will look forward to the best rate available to you. A mortgage broker will seek out and guide you through this process so it is almost as simple as signing that renewal but you know you are getting the best rate available.
Things to remember
1. Blind loyalty is expensive.
2. Knowing what the current best rates are will give you the ability to get the best rates
3. Asking a bank to help you save money is like asking the Government to help you save on your taxes....
4. Talk to a mortgage broker about 4 months before your current mortgage is due for renewal. Most pre-approvals last up to 4 months and you are not obligated in anyway to that pre-approval but if there are any situations that come up with your application you will have time to fix any inconsistencies.
(Note: in the study, the Big 8 was listed as our traditional Big 5, plus National Bank, Desjardins and ATB Financial.)
Having a mortgage broker arrange your mortgage increases your financial options. Most times you do not pay for this service; you save time and money.