In his edition of Mortgage 101, Clinton Wilkins and Todd Veinotte talk about how the pandemic has impacted inflation and the housing supply.
What should we know about renewals? How do we prepare and when should we start thinking about it? Clinton Wilkins and Todd Veinotte are diving into renewals in this edition of Mortgage 101. The guys chat about why it’s important to deal with it early, the importance of advice and having an advocate and how to prepare for a renewal.
Please note that the below content is pre-recorded and may not always reflect the most current information or developments.
Todd Veinotte 00:04
What do you think of the outrageous costs for tickets? Kind of cut off topic but –
Clinton Wilkins 00:09
For Shania or just tickets in general?
Todd Veinotte 00:11
Clinton Wilkins 00:12
Think about even like Taylor Swift like the insanity that went on.
Don’t ostrich: deal with your mortgage EARLY
Todd Veinotte 00:17
Yeah. Alright. Well to that we ties in obviously with what we’re talking about. And some people are in the position where they’re refinancing their mortgages. Because of all the financial pressures that we’ve been discussing throughout the show, right?
Clinton Wilkins 00:28
Certainly a lot of uptick in the amount of even refinances that we’re seeing, right. I think primarily, because people are obviously having a tough time with inflation. Something to do with obviously, the rates, some people are refinancing midterms, but really at renewal, we’re seeing a lot of reworking going on.
Todd Veinotte 00:46
Yeah, yeah. So what are, let’s talk about the mechanics, I guess, of a renewal.
Clinton Wilkins 00:51
So at renewal, if you don’t do anything, your lender will likely either put you into an open term, or like a six month or one year closed term, fixed rate. Those rates are very, very high. So don’t ostrich I know that’s now our new like bird of the show, I guess we’ll call it. Deal with it and deal with your situation early. Start looking at your situation at least 120 days, so four months before your renewal, start looking and thinking about your situation. Because you can’t just avoid it. The situation will certainly impact you. You can’t just keep the rate you have. When your term is up, your term is up, it’s finished. So certainly deal with it. And it’s a great time to think about, maybe they’re changing lenders, maybe increasing your amortization, changing your rate product, changing your mortgage product, maybe boring, more money, there’s so many different things that can happen when your mortgage is up for renewal, it’s a great time to think about it. And think about making some changes.
Todd Veinotte 01:53
How often does it happen? I don’t know, you obviously wouldn’t have exact numbers here. But anecdotally, I guess, do people just simply renew and they don’t even perhaps even realize that they’ve renewed.
Clinton Wilkins 02:03
So often. People just avoid so many things. I know talking about mortgage finance, talking about your finances is not that exciting. We’re breaking down some barriers here on our show. But people don’t open their mail. They don’t know when their mortgage is up for renewal, they don’t know when their insurance is up for renewal. They don’t even know what their mortgage rate is, they have no idea. And a lot of people don’t even know who their mortgage lender is, or maybe who their mortgage broker was during that transaction.
Getting an advocate is very valuable
Clinton Wilkins 02:30
So I think you need to be an advocate for yourself. You need to ask for advice. You need to go to someone who you’re going to have that trust with. And, you know, I think that’s where we win in a lot of these cases, Todd. We take a lot of this pressure away from people, we don’t have to think about it, like we’re gonna get a hold of you, don’t worry, you’re gonna hear from us way before you’re going to hear from your lender, you’re gonna have us worrying about it before you need to start worrying about it. And I think having an advocate like that, on your side, certainly is very valuable for a lot of people. Some people want to self direct and do their own thing. And I mean, that’s cool, too. But we’ll take we’ll take the order from some people, if they just want to transact. But we’re very much in that advice business. And when you have a mortgage that’s coming up for renewal, the advice is just very, very important. Because in many cases, you’re a free agent. I had one of my existing clients in today. We’re doing a transfer from one lender into another lender. The existing lender, called them and said let’s talk about your options. If you don’t like it, maybe we can do something different. And they’re like, I’m going to see my mortgage broker. He’s the one who set up this mortgage, I want to go get the advice from this person. And we’re going to decide together, what the best way to move forward is. And, you know, I showed her the rates that were available. Obviously, I showed her what we already had approved and what we had secured for her. And the rate that we had was 50 basis points or half a percent lower than what her existing lender was offering. Easy. She’s like, where do I sign? And I’m like you know what, I think we might be able to maybe do a little bit better, just depending on, you know, what happens between now and the time this renews. Like the mortgage renewal wasn’t not until November. So the rates go down, we will give people the lower rate. And we don’t get paid based on rate. And I think that’s really what is really important to note. Much different than when you’re dealing with a bank branch, the bank branch will kind of start high and be like, alright, we’ll let you whittle this down. For us, we’re giving everyone the lowest rate kind of like rate out of the get-go. So then we really want people to be happy. And we want them to obviously be committed, and we want to be committed to them because more than 60% of the transactions that I do every day are for repeat customers. And I think it just speaks to the advice that people get, they’re coming back. But we always are accepting new customers always. Part of the reason as our customers pay off their mortgages, and they pay down their mortgages, so we always need new customers coming in. Just the way that’s the way that that this business works. With every lender, that’s when they want.
When you might renew with an existing lender
Todd Veinotte 04:57
There might be times though when it would be advantageous just to simply to renew like if you’ve lost your job.
Clinton Wilkins 05:03
Yeah I think if there has been a like a gap of employment or like if you’re not employed right now. Yeah, maybe renewing with your existing lender makes sense. If there’s really been like a terrible credit situation, and you don’t need any help right now, sure renew with your existing lender, if it makes sense. But I’ve seen people in these type of situations Todd, and their renewal offers from their lenders are just so terrible, it would shock you. Because like, the lenders aren’t dumb, right? Like they know. They’ll have a little look at the credit, see what’s going on and be like, oh these people are their credit is not so good. Like, we’re gonna offer them a higher rate, because you know what, they’re probably not going to shop around. So I think getting the advice is still important.
Todd Veinotte 05:43
Yeah, for sure.
Clinton Wilkins 05:44
So so important.
Todd Veinotte 05:45
Yeah. So I guess for those people, if you do want to shop it around, then get your documents, get your tax documents and your notice of assessments and all that stuff. Because you’re going to need that stuff.
How to prepare for a renewal
Clinton Wilkins 05:57
You need your last mortgage payment, your last property tax bill, you probably need two years of your employment confirmation. You know, if you’re employed with employer, maybe the last two years, your T4s, maybe your pay stub, if you’re self employed, well, that’s pretty easy, because you probably have an accountant. So just connect us with the accountant. You know, where your documents are. And also the get us the documents, because without us getting the documents is really tough for us to like, be able to give the advice.
Todd Veinotte 06:21
Yeah you’re gonna need them anyway, for underwriting, they’re gonna –
Clinton Wilkins 06:24
Yeah we’re gonna need them later. So you might as well get them to us in a timely manner so that we can know what’s going on. And I always tell people, I’m like, the rate that we’re going to tell you this is not secured until we submit it. And we don’t just throw stuff at the wall. We want to get these documents up front. So like, be an advocate for yourself and get the documents together.
Todd Veinotte 06:39
Yeah. And you were saying that if it takes two or three hours for somebody to do or whatever time they put into it, sure it’ll take a bit of time but –
Clinton Wilkins 06:46
I usually say like five hours is usually the amount of commitment that someone needs to look –
Todd Veinotte 06:49
But somebody could be potentially saving thousands and thousands of dollars.
Clinton Wilkins 06:53
It happens every day. Yeah. Like I see people. And I see them like every day, to be like, okay, you’re gonna do this transaction. And the outcome is gonna be this, you’re gonna save this much per month. Let’s say it’s like $200. Well, what’s 200 over three years, over four years, over five years, it starts adding up. Right? It starts adding up. Now, we don’t know what’s going to happen with rates. We don’t have a crystal ball. Obviously, there’s a lot of things changing. And when we give advice, it’s a snapshot in time. This is what we know today. This is where the rates are today. This is what the economists are saying today. And things change. And my advice has changed over the period of time. And, you know, just to circle back, we still have lots of people doing a variable rate mortgage, Todd. It is right for a lot of people. But the rate products are obviously very different from lender to lender, and the advice changes, obviously, from customer to customer.
Todd Veinotte 07:44
Okay how do people get ahold of you, Clinton?
Clinton Wilkins 07:46
Check us out online at teamclinton.ca. Lots of great info on there. Thanks for listening. I really appreciate it and we’ll be back with you here in September.
Todd Veinotte 07:54
Absolutely. Thanks so much for listening. And again, if you want to listen to the podcasts you can do so online and all that good stuff.
Clinton Wilkins 08:00
On our website or on CityNews.
Todd Veinotte 08:02
Exactly. Okay it’s Mortgage 101 with Clinton Wilkins and myself Todd Veinotte. Thanks so much for listening folks.
Clinton Wilkins 08:16
If you’ve liked what you’ve heard, and you want to learn more, feel free to visit us online at Tim clinton.ca