After five years, my mortgage is up for renewal in July. My current lender just send me a letter detailing my renewal options. I currently have a variable rate mortgage with a current rate of 2.25%. They gave me two viable renewal options: a 5 year fixed at 2.79% or a 5 year closed, variable at 2.35%. It doesn’t take a rocket surgeon to see that they are offering me the same mortgage product, the variable rate one, at a rate that’s one-tenth of a percent higher. Why would I choose to renew at that rate and pay more?
A quick look at a mortgage comparison site showed me in less than two minutes that I can similar mortgages at 2.00%, a substantial amount lower than what I was offered.
I’ve read that lenders try to take advantage of the convenience factor so they can lock you in at the higher rate. Indeed, they sent me all the forms for renewal and all I have to do is fill out a few boxes, sign my name, and then mail it off with pre-paid envelope. Boom! Then I’m paying more money that I have to for another five years.
It’s clear that I’m going to do some shopping around before choosing what mortgage product I’ll be going with for the next few years.