When your mortgage term is up, your lender will likely send you a renewal offer. But don’t just accept the first one. You have the power to negotiate a better mortgage renewal rate, which can save you money over the life of your loan. Here’s how to do it.
Know Your Current Market Rates
Start by checking current mortgage rates. Look at the best rates available, especially from other lenders. Use this as a baseline to understand what a competitive rate looks like. Your current lender may offer a renewal rate higher than what’s available on the market.
Review Your Current Mortgage Terms
Look at your existing mortgage agreement. Are there any clauses or terms that could be adjusted to your benefit? For example, you may be able to negotiate a shorter term if rates are expected to go down in the near future.
Shop Around
Don’t hesitate to reach out to other lenders. If they offer a lower rate, use this as leverage in your negotiations with your current lender. Sometimes lenders will match or beat an outside offer to keep your business.
Highlight Your History as a Borrower
If you’ve made your payments on time and kept your mortgage in good standing, let your lender know. A solid track record can help you negotiate a better rate.
Consider Your Loan-to-Value Ratio
The lower your loan-to-value ratio, the more bargaining power you have. If you’ve built up equity in your home, mention it. A lower LTV makes you a lower risk for lenders, which could result in a better renewal rate.
Don’t Be Afraid to Negotiate
When your lender offers you a rate, don’t accept it right away. Ask for a better rate. Lenders expect you to negotiate. They might not offer their best rate upfront, but with some back-and-forth, you can usually get a lower rate.
Be Ready to Walk Away
If your lender won’t meet your expectations, be prepared to switch. Sometimes, the threat of taking your business elsewhere can lead to a better offer. If you can get a better deal with another lender, it may be worth making the switch.
A mortgage renewal is a good time to reassess your loan and negotiate a better deal. Don’t settle for the first offer. Do your research, be firm, and use your bargaining power. It could save you money in the long run.
