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IS SWITCHING YOUR MORTGAGE A GOOD IDEA?
You've heard about the switch mortgage and know that it means moving your mortgage to another lender but don't quite understand the whole story.
I think the best way to tackle the switch mortgage is to answer some of the many common questions that come up.
First off, when you get that renewal notice in the mail, do yourself a favour and don't just sign it and accept the lender's interest rate and terms without talking to a mortgage broker, we may be able to get you a better deal.
Banks make good money with renewals when people just sign the renewal and send it back. Remember, there's no cost or obligation to have us take a look.
Why would I want to switch my mortgage to another Bank
There are several reasons why people switch their mortgages, but the primary reason is that another lender is offering a better interest rate or better mortgage terms.
Another reason people switch is that they're unhappy with their current lender. It happens all the time.
What happens when I switch my mortgage?
Essentially the new lender transfers over your current mortgager balance and the remaining amortization period of that mortgage. If your outstanding balance is $95,256. and the remaining
amortization period is 21 years, then that's what the new lender transfers over. Your new mortgage payments are then based on these numbers and the interest rate offered.
When I switch can I refinance at the same time?
The short answer is yes, Without incurring fees, some lenders will permit you to refinance to the original mortgage amount while others have limits of between $1000.00 and $4000.00. You also have the option of doing a switch with a total refinance but you will be subject to fees similar to that incurred with registering a new mortgage.
What are the costs to switch my mortgage?
If all you're doing is switching your mortgage to another lender then you should not be subject to any fees or payout penalties. Now, if you decide that you want to switch and increase your mortgage amount or lengthen the amortization period, then the mortgage would have to be re-registered. If that's the case, you would likely be subject to legal fees, appraisal fees, etc.
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