Switching to a New Mortgage Lender: Explore How it works?
The term switching of the mortgage to a new mortgage typically refers to changing one lender to another. Whatever may be the reason, the mortgage shift requests for a change in the lender along with the interest rate and term. It is always beneficial to switch your mortgage lenders when you find one that offers lower interest rates or a sudden change in your life that dramatically impacts your financials such as getting divorced or losing your job. Switching mortgage lenders is always going to be helpful when done through a proper channel, under the supervision of an expert mortgage broker, and with terms that are different from the current mortgage that you have.
In order to switch your mortgage granter, you might have to pay a penalty to your lender, but the revised interest rates may still get you in a better financial position. To apply for a mortgage switch you need to get a copy of the current mortgage contract that you have, confirmation of assets as well as income. A letter signed by your current lender is also required before you proceed. Now, these are just the documents that may be needed, more work is required.
Benefits of Switching Mortgage Lenders: How to Take the Leverage
The benefits of switching your private mortgage lenders are numerous, so it would be a good idea to explore this option when your current mortgage is up for renewal. Even if are being offered a slight decrease in the interest rate, even that might help you. Let us see an example; if you have a mortgage with 20 years left on $200,000 with an interest rate of 3.5% then monthly payments would be $1160. If the rate drops to 3% then the monthly installment becomes $1110. For the period of 20 years, the total difference will be of $12,000. This is how mortgage switching moneylender helps you save money for other financial opportunities and saves you from long-term debt. IF you have a look at the monthly benefit, it may seem less but overall, you get thousands saved.
Find Out What Costs are Involved in Switching Mortgage Provider
Once you begin to explore the option of switching mortgages, it is only natural that you may also be interested in the costs that may be required to cover during the same. Following are some of the costs that you need to keep in your mind before you decide to switch mortgage backers.
- Appraisal value to be calculated for the property.
- Assignment fee to transfer from one lender to another.
- Discharge fee to switch your old mortgage and register the new one.
- The fee you will pay to your legal advisor the mortgage broker who will connect you to a new mortgage lender.
- Property tax bill.
What’s Required to Switch Mortgages in Canada?
When switching mortgages, it is necessary to verify your source of income, proof of insurance, identification, and documents related to the current terms and conditions of your current mortgage. Another aspect to keep in mind when thinking about switching mortgages is to have a good credit score, have no negative equity, and still have at least 5 years remaining on your mortgage.
Is Switching Mortgages Worth It?
The process of switching mortgage lenders is a new option that is eagerly being used by many mortgage applicants as it allows them to explore and divert their installments to a new plan that will benefit them in the long run. A mortgage switch is worth it when the terms and interest rate given by the new private mortgage lender are less compared to the current mortgage that you hold. While the entire process may seem cumbersome, the example shown above tells us that the use of this option may be worth all the pain. It is however wise to always inform your current lender well in time and seek guidance in terms of your LTV (Loan to Value) ratio.
Know the Ideal Time to Switch Your Mortgage Provider
There are no fixed ideal conditions or time to switch your mortgage backers but anytime you find yourself in a situation where there is a change in your financials then you may explore this option. You may have your monthly debt installment be greater than the salary you get, or you may have lost your job and are unable to pay at all. Your mortgage switching can also be a long process so you may look for a time when you are not severely occupied with a lot of tasks to do. There are often revisions and several meetings with both lenders so you might leave enough room in your timetable.
Switch Your Mortgage Lenders With Us!
Mortgage renewal is no joke and requires you to have as many options to choose from as you can. The financial decision you take today leaves a long-term effect; you need an expert broker who has in-depth knowledge in the field of mortgage switching and has a circle of contacts that lets them make effective decisions.
Mortgage brokers at SN Mortgage are well versed with the rules and regulations of switching mortgage lenders in Canada as well as the flexibility. One may have. Our experience of over 20 years and well-established business makes us a reliable option for you to employ. We also offer free first consultation to discuss the possible options that best suit your financials.