The Hidden Costs of Mortgage Renewals: What You Need to Know Before You Sign
I recently spoke with someone about their mortgage renewal. Their current lender was offering a competitive rate, but there was a catch—massive penalties if they needed to break their mortgage early.
If interest rates drop significantly, they’d be stuck paying a hefty fee to get out of their mortgage. If life throws them a curveball—whether it’s a job relocation, an unexpected expense, or a need to restructure—the penalty could cost them thousands.
Too often, people focus only on getting the lowest rate without considering the bigger picture. That’s why I make sure my clients are in mortgages that not only save them money now but also protect them in the future.
When Lower Posted Rates Can Actually Hurt You
Some banks have recently cut their posted rates, which might seem like good news—but for anyone locked into a fixed mortgage with them, it actually means higher penalties if they need to break their mortgage early.
Here’s why: Two major banks recently attracted a flood of new mortgage clients by offering great fixed rates. Now that they’ve lowered their posted rates, their penalties have increased. This means homeowners who need to refinance, sell, or break their mortgage will end up paying significantly more to get out of their mortgage.
Luckily, I actively monitor this for my clients and ensure they’re in mortgages with lower penalty risks. If you don’t have someone managing your mortgage, make sure you fully understand how your bank calculates penalties—because the wrong mortgage could cost you thousands.
A Costly Mistake: Rushing a Mortgage Renewal
I recently came across a situation where someone didn’t realize their mortgage was up for renewal. With just a week left before maturity, they quickly signed the renewal letter from their bank—locking into a 5-year fixed term at an above-market rate.
By the time I heard about it, it was too late to help. There was no discussion on:
How their rate compared to the market
The best mortgage strategy for their situation
Managing cash flow or debt effectively
Potential penalties if they needed to break early
A 5-year fixed mortgage with a bank can come with massive penalties, and this rushed decision could cost them thousands while making the bank a lot of money.
Treat Your Mortgage Like an Investment
Your mortgage is likely the biggest debt of your life—treat it like an investment, not just paperwork. Before you sign anything, reach out. I’ll make sure you’re not locked into something that could cost you later.
Let's Talk About Your Mortgage
If you're looking to renew, refinance, or get a new mortgage, let's make sure you have the right strategy in place. Schedule a call with me, and I'll help you navigate your options to save money and avoid costly mistakes.