As a mortgage broker I see renewal letters all the time. In a recent renewal notice for a client that, “had a long relationship with their financial institution”, was quoted a rate that was almost 1% higher than a comparable mortgage we could offer at another financial institution.
Why do banks play this game?
Simply because they can. Over 80% of people renewing their mortgage simply sign the renewal offer sent to them by their bank. Being a loyal customer can actually cost you more!
How can you avoid being taken advantage of?
1. When you receive your renewal letter contact your bank and ask them why they offered you that particular rate and mortgage product. Personal situations change and at renewal it’s a great time to take advantage of making a change to your mortgage. ie: Making a lump sum payment or adjusting your amortization.
2. Don’t play their game when they say, “That’s just our standard rate offer.” Banks are in business to make money and the representatives are trained to say this. If you decide to give them a chance to quote you a respectable offer for your business give them only one chance to provide you their best terms.
After that simply work with the one who you feel has your best interests in mind.