Good Day Everyone
Today I’ll be sharing with you on my mortgage renewal process and going through some of the things I learned along the way.
So to start, my original mortgage was with BMO for a 5 year fixed rate mortgage @ 2.99%. At the time, my dad told me to go with fixed because “rates couldn’t possibly go further down!” Well that was a mistake because had I gone with a variable rate, I would’ve done much better. None of that matters now, what’s done is done and I’d rather look ahead.
At first I was considering another 5-year fixed rate mortgage, so I asked someone I know who works at TD bank what his rate was and he told me 2.64%. Armed with that information, I walked into my BMO office ready to negotiate.
I didn’t know this but if you have a fixed mortgage and you sell your house and get a new mortgage for your new home with the same bank, you still have to pay penalties! I definitely wasn’t interested in a 5 year mortgage any more since there’s no way I’m staying at the condo for another 5 years. The mortgage advisor ended up offering me a 2 year option (2.24%) or a 3 year (2.64%). I already knew how this would turn out, but I took the offers home to discuss with future Mrs. Options2Riches. I also logged onto Borrowell to check my credit score and the mortgage rates they are offering (check your score and mortgage options with the link to Borrowell here)
As you can see, my credit rating is pretty good, but it turned out that the 2 year fixed rate there was the same as what BMO offered so we opted for the 2 year fixed started March. At the end of the 2 years, we’ll look at where we are in life and decide what to do next.
Why did I opt for fixed rates?
There are two main reasons I went with fixed rates. I looked at the amortization table with the new rate and remaining principle, and I was comfortable with the balance of interest and principle payments @2.24%. The other reason is that I have noticed interest rates creeping up since Trump got elected. I didn’t want to get a variable rate mortgage and sweat it out for the next two years so it was an easy choice for me.
I have a feeling I was able to get the same rates as what an online mortgage broker could offer because I’ve been with BMO my whole life and most of my assets are with them. If I were to walk into Scotiabank and ask, my rates would probably not be as favorable. If you are in the market for a mortgage (new or renewing), it would be wise to shop around several different mortgage brokers. Even if you aren’t comfortable with the idea of borrowing hundreds of thousands of dollars online, knowing what rates are available out there will increase your negotiating position at your bank so I do encourage you all to check it out.
As a follow up to my last post about TD
- Employees from the other banks came out and said they do the same thing to customers. That should be a surprise to nobody because people will do unspeakable things to each other when they feel backed into a corner. So stay on top of your banking to make sure you weren’t affected!
- Most branch employees are good people. When I tried to get a home equity line of credit through BMO, they recommended against it because I’d be selling my home in the near future and that would kill the loan as well. They could’ve made an extra couple bucks off me, but chose not to because of the long relationship I’ve had with them.
Bottom Line: Mortgage rates are near all-time lows. If you’re lucky enough to lock into rates and payments you can afford you should do it now, but keep in mind that if you’re in a 20 year mortgage rates won’t stay this low forever. Please borrow responsibly and ensure your cash flow can withstand any increases in future rates.
Have a Great Day
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