RENEWAL RANCOR: The Games Banks Play
Five weeks ago, a client of mine contacted me – knowing that her mortgage was up for renewal on December 15, and wanting to explore her alternatives.
Her existing 5-year closed mortgage was fixed at 3.49% and she knew rates were now lower, regardless of a recent climb. I arranged for her to switch at maturity to a new institution, at a 5-year fixed rate of 2.69%. Significant savings. Hurrah!
But here’s the rub: my client would not have reached out five weeks ago if she didn’t realize ON HER OWN ACCORD that her mortgage was maturing on December 15. Between October 22 and last week when the file was completed, she and I were acting on her initiative…NOT because she had received a renewal letter from her incumbent bank.
In fact, my client didn’t receive her old bank’s renewal letter in the mail until…yesterday.
And while the letter was dated November 10, it was mailed from Vancouver (or for the benefit of the doubt, perhaps Toronto) and didn’t hit her postbox until November 24.
November 24 is exactly 21 days before December 15, the end of the existing term – and 21 days is the federally regulated minimum lead-time that you as a borrower are entitled to receive renewal notification from a financial institution.
Coincidence? That’s not all.
Look what they offered her for a 5-year fixed rate:
Not only did this bank’s renewal notice get to my client at the latest legally possible date, but they offered her a renewal rate HIGHER than her previous term. And in THIS market, that rate’s not even on the right planet.
A stellar client, who makes five years of payments like clockwork – then gets treated like this.
I have a word for that. Insulting. Almost as insulting as the bank’s subsequent pleas and offers to her, to stay.
Had my client not been alert enough to start exploring with me early, she may have only thought about it today. And rates today are not even as good as they were two weeks ago, let alone when we organized a submission.
Worse yet, she could have just initialed the product and term of her choice and sent that letter back with no questions asked. In the context of this tale, that seems outrageous…but know this – not even half of Canadian mortgage holders negotiate different terms than those presented in their banks’ renewal documents.
That is why I always say: never, EVER, just send that letter back. In the sport of mortgages, you are a free agent at renewal. Contact me to find out if YOUR bank is playing fair.
CLICK HERE for more of my rants – and strategies – on mortgage renewals.