Money-saving advice on renewing your mortgage

Being proactive with your mortgage renewal is the best way to ensure you get the most competitive rate possible.Your financial institution or mortgage lender will send you a renewal notice one to two months prior to the mortgage renewal. My recommendation is to seek the advice of a broker six to four months in advance. This is especially relevant in the current market place as rates are forecast to increase.

How does this work? Mortgage brokers work with lenders that can hold the interest rate on a mortgage for four to six months, which guarantees the rate. Once you've submitted an application we track interest rates on a weekly basis, so if rates decrease as you get closer to your mortgage renewal we can make a downward rate adjustment. Mortgage brokers work with multiple lenders so if another institution happens to have a more competitive rate, we can switch the rate hold to that institution. Your bank will not call you and suggest you go see another lender because their mortgage rate is more competitive. That's one of the benefits of working with a mortgage broker.

Mortgage brokers are also motivated by different factors than banks. Both parties are in the business of making money… however mortgage brokers have the flexibility and authority locally to make the right decisions for their individual clients. When I describe the difference between brokers and banks to my clients, I term my industry as the "Walmart of the mortgage world." Let me explain… when you buy something from Walmart the product is often deeply discounted because they buy 1000's of the same product making their unit costs lower. Walmart deals in volume, much like a mortgage broker does.

Your bank branch is like a mortgage boutique. Because they may only be buying 100 mortgages per month they have to price them accordingly (normally at a higher rate, unless you beg them to give you a deal). Mortgage brokers don't have a posted mortgage rate and a discounted rate like banks do. We only work on the discounted market rates which vary slightly. Conversely, a bank has a posted rate and they decide how much of a discount you'll get off of your mortgage. Clients benefit from using a mortgage broker because they don't need to negotiate the interest rate. When that's the case you can ensure your mortgage is setup in the most financially beneficial way possible. You can plan for the liability enabling you to pay it off within your financial goals.

Remember there's more to mortgages that just the interest rate. Getting a rate locked in by a mortgage broker four to six months before your mortgage renews will help you get the best available rate on the market. This is especially critical because we are in an increasing mortgage-rate environment.

I'd love to hear your experiences on renewing your mortgage with a bank or a mortgage broker! Please e-mail me at lastovic.s@mortgagecentre.com or visit my blog at www.lastovic.s@mortgagecentre.com and offer your comments. If you're on twitter you can follow me @Sandra_lastovic.