Should you switch your mortgage to save money?

Jesse Abrams - April 5, 2018, 2:24 pm

You are the client and deserve the best possible service. If you are ever unhappy with your current lender, there are many mortgage options out there to choose from, and the right mortgage provider can make a world of difference. It can help save you money, find you better terms or overall provide you with a better service.

        

Why do people switch lenders?  

  1. To get a lower rate - their current lender isn’t offering them the best rate, so they would like to switch to another lender to find a lower rate

  2. To get better features, terms and conditions - their current lender doesn’t provide them with the features, terms and conditions that they need. This includes prepayment privileges, portability, open/closed, etc.

         

How to switch mortgage lenders

Use a service like ours at Homewise, where we can take your profile and shop it around to multiple lenders to find what is best for you. Once we’ve found a new lender with an offer you want to accept, you’ll need to fulfill the mortgage conditions. Because every lender is different, you will need to supply

  • Mortgage renewal letter - a document that you will get from your existing lender a month or so before your mortgage term expires

  • A utilities bill or property tax statement

  • Income confirmation, by way of your notice of assessment, T1 General, job letter and T4/T4a

  • Property insurance statement

         

Costs of switching lenders

The fees you’ll have to pay when switching providers may include:

  • Appraisals are usually necessary to prove to the new lender that the value of your home is what you think it is- appraisal cost is around $400.00

  • Legal fees- including costs to assign the mortgage (transfer it from one lender to another), or to discharge the mortgage and register a new charge. These costs could range anywhere from $300-$2000, depending on what is needed from the lawyer.

** Do not be discouraged by these costs, often times your new lender will cover any an all fees as an added incentive to switch to them.

       

Things to be prepared for when switching lenders

Switching is not always a straightforward procedure, and some situations will require a little further expertise.

  • If you have a collateral mortgage charge you will need the assistance of a lawyer to do some extra work which could end up costing slightly more money than anticipated.

  • If you want to switch lenders in the middle of your mortgage, there will be penalties to break the mortgage early and it is a good idea to speak to us to determine if it will save you money in the long run to switch at that time.

  • When you switch lenders, although your rate and terms will change, your amortization period and mortgage amount will always remain the same. If you would like to change those factors of the mortgage, this is not a switch- it is called a refinance and a different set of procedures will be required to carry out that action. See our explanation of Refinance, for more information.

       

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