Even though a lot of things have stopped right now, the housing market hasn’t, and that means mortgages haven’t either—but can you get (or renew) a mortgage from home?
Luckily, based on my recent experience, the answer is 100% yes.
We bought our house in The Before Times, so we had a more IRL experience with printed account statements and in-person visits a few years ago. Crucially, we also had a much more straightforward process because my husband already had an existing mortgage that we had to transfer to our new house to avoid fees for breaking it.
That mortgage only had a few years left on the fixed term, so even though we bought 3 years ago, the mortgage is up for renewal this month—and I was itching to shop around. Mortgage rates are an easy and high-impact way to optimize your finances, and I was ready.
Here’s exactly how we renewed our mortgage—including extensively comparing rates and negotiating with a lender—all from the comfort of our house in about an hour, total.
You can do it too, even if it’s your first time getting a mortgage.
Know your mortgage options
In ~these uncertain times~ you’re probably going to hear a lot about fixed versus variable interest rates. That could be a blog post on its own, since the relationship between the interest rate set by the central bank and the interest you pay on your mortgage is like, A Whole Thing.
This is a great piece that includes the difference between the two, but for me, the only thing you really need to understand doesn’t have much to do with the interest rate at all.
How comfortable are you with risk? This includes a few things, like
- Do you feel OK with the fact that your monthly payments could go up over the course of your mortgage term? This isn’t so much about the hard facts of your finances, and more about how the uncertainty makes you feel.
- Can you handle a potential increase in your mortgage payments over the next few years? This is more about numbers, less about feelings.
One of those might carry a lot more weight, and that’s OK—yes, even if it’s the feelings one. It was for us! The research has shown that in the past, people who opted for a variable rate saved more over the course of their mortgage term than fixed rates, but paying a premium for an option that feels better is not a bad thing if you value it.
Understand the impact of your rate
The interest rate on your mortgage is a Low Effort, High Impact financial moves. It’s the rare thing that lives in the bottom right hand part of the savings tactics grid, but also isn’t some kind of scam.
It’s always worth being skeptical of things that are pitched in this category, but truly, this is one. (Here’s 5 high-effort, high-impact things that are also heckin’ valuable.)
It’s easy to forget, because the difference between 2.49% and 2.79% seems small when you look at those numbers. The thing is, the number you’re applying it to definitely isn’t small, with the median house price in Canada forecasted at $531,000 for 2020, and higher in some markets. If you’re borrowing 90% of that price, all of a sudden paying an extra 0.3% on that number adds up over time.
In this case, getting the lower 2.49% rate means saving over $6,740 in interest over the course of a five-year fixed mortgage—and all you really have to do is compare the rates you can get, and make sure you’re getting a competitive rate.
Compare the rates you can get
OK, so comparing your rates sounds like a big deal, but it really is also easy, thanks to mortgage brokers. Whether you work with a broker in your area, or use an online service like Ratehub or Breezeful to connect with a broker online, the basic premise is that a mortgage broker has relationships with dozens of lenders who are all competing to offer you the best mortgage.
Independent IRL broker or online broker? Mortgage brokers are great, and I’m a big fan of both options, but there are pros and cons to each. At the highest level, if you want a personalized experience and great support during the mortgage process (especially if you have a non-traditional situation, like being self-employed) an independent IRL broker is a fantastic fit. If you’ve got a really straightforward financial situation, or you’re just shopping around, online brokers can be a perfect fit.
There’s a lot that goes into “the best mortgage for you,” not just rate, and your broker can help walk you through that whole process—but for now, let’s stick to talking about rates.
When we got the renewal notice from our existing lender, the first thing I did was head to one of the great online options, enter a few details (like how much was remaining on our mortgage, whether it was CMHC insured, and the time left on the mortgage) to get a preview of the rates we could get.
I say could, because there’s actually a lot that goes into securing those rates, which can also happen online. I wanted to be really sure we could get those low rates, so I went through the rest of the online process with the brokerage, including filling in details about our household income, debt levels, employment, and other historical information. Even though it was comprehensive, it only took ~10 minutes to get everything we needed.
The last thing we did was jump on a quick phone call with the broker assigned to our file through this online process to ask questions and confirm that yes, we did actually qualify for the low rates we were seeing online.
Use the information to your advantage
Now that we had information, we took it back to our current mortgage lender, who had offered us an initial rate that was higher than what we currently paid—and markedly higher than the rates we were qualifying for through the broker. We sent over an email explaining our research and the rates we qualified for elsewhere, and asked if they were able to come closer to the lower rate.
Two days later, they were able to offer us within 0.1% of the lowest rate we had qualified for online, all via email. My husband and I had previously discussed what premium we were willing to pay to stay with our current lender, and that was within the margin we had talked about, so we agreed.
Just like that, we saved ~$5000 over the next 5 years with our current lender, with all of 30 minutes of work comparing rates online and confirming we were eligible.
Sign and scan paperwork using technology
Our lender sent over renewal paperwork in the mail, and once we had agreed on a rate, we signed it, used CamScanner on my phone to scan the documents, and sent them back by email.
If you’re getting a new mortgage, or switching lenders, there’s definitely more paperwork involved, like an employment letter or financial statements to confirm you can afford your mortgage, but all of the online brokers will have portals you can use to upload digital copies, and even the lowest-tech brokerages can probably accept emailed documents.
So just because we’re in a Weird Time, doesn’t mean you can’t shop around for a mortgage, whether you’re getting a new one or renewing your existing mortgage. And if about an hour of your time can save you thousands of dollars, it’s well worth the effort.