When Christie, a 42-year-old mother of two in Calgary, tried to renegotiate her mortgage with her bank, she was given few options. At three years into a five-year term, she faced a stiff penalty for breaking the fixed rate mortgage of 5.10 per cent and her bank was unwilling to match rates from other institutions. Although she had a 13-year relationship with her branch, she decided to shop around for a better deal.
Christie's search started online, where she came across RateSupermarket.ca, a service that lets homebuyers compare mortgage rates as well as mortgage brokers across the country. Within a week, she had transferred her mortgage to a new lender at a variable rate below the prime lending rate.
"I wanted to take advantage while rates are so low," she says, adding that the lower interest rate made paying the penalty worthwhile. "Even if prime doubles, I'm still below what I was locked in at."
A majority of Canadians - 64 per cent - are expecting mortgage rates to rise over the next year and are thinking about how to best manage their mortgages, according to an RBC survery released on Wednesday. Roughly the same number of mortgage holders - 66 per cent - are worried about higher rates.
"The best advice for concerned homeowners is to review their mortgage holdings with a financial advisor regularly, just as they would an investment portfolio, to position themselves for any upcoming changes," said Marcia Moffat, RBC's head of home equity financing.
Ms. Moffat advises homeowners to review their options for reducing their mortgages while rates are low, such as doubling up on payments or paying large chunks of it annually.
According to RBC, six out of 10 mortgage holders are taking advantage of current low interest rates to pay more principal. Eighteen per cent of home owners say they have made a lump sum payment on their mortgage and 16 per cent have doubled up their payment to reduce their mortgage principal.
Still, for many Canadians, these options are simply out of reach. For those who want to benefit from the low-rate environment, this may be the right time to shop around to refinance or renew an existing mortgage.
"Mortgage rates are at near all time lows and many Canadians are missing an opportunity to get better rates by staying loyal to their existing mortgage providers," says Kelvin Mangaroo, founder, RateSupermarket.ca.
According to a recent poll by RateSupermarket.ca, half of the Canadians surveyed renewed their mortgages without researching better rates.
While you may decide to stick with your bank, it makes sense to comparison shop for your next mortgage.
As Christie, the mom from Calgary, put it: "Bottom line, there are better offers and options out there. All you have to do is ask."
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