PROUDLY CANADIAN
When you have a mortgage, you are set with a monthly payment based on a particular interest rate, loan amount, and term limit. Over time, you may begin to consider refinancing your home loan or actually switching lenders. Is it possible to switch mortgage companies without refinancing? It is, but you may want to evaluate if you will be better off refinancing or going with a switch based on factors such as how much you owe, your current interest rate, etc.
Why Switch Lenders?
If you have never considered switching lenders, you may be wondering why people would choose to do so. There are many reasons with the primary being that another lender can provide better mortgage terms or interest rate. Mortgage holders who have been unhappy with the service provided by their lender may switch due to communication issues or customer service.
What Happens During the Switch?
Basically, the new lender will transfer your current mortgage balance to their institution and the remaining amortization period of the mortgage is considered. If you owed $90,000 with amortization of 20 years left then the new lender would follow these figures for your mortgage payment. An interest rate would be provided to set your monthly payment.
Do I have the option of Refinancing with a Switch?
You do. Without taking on any extra fees, many lenders will allow you to refinance based on your original mortgage amount. Some lenders may have limits so you will want to find out if there are any limits when it comes to mortgage refinancing. Find out your options and what will work best for you before committing to a simple switch or refinance.
Costs of Switching Lenders
If you are only switching your current mortgage to a new lender, then you should not have to pay fees or a penalty for payout. However, if you are planning on increasing the amount of your mortgage or having a longer amortization period, then you will have to re-register your mortgage which would include fees such as appraisal and legal fees.
Basic Process
The process of switching lenders is pretty simple. Most lenders only require that a form be filled out and a recent mortgage statement provided from the current lender. Legal documents may also be required from your original mortgage. It is important to consider a mortgage renewal around 90 to 120 days before your renewal date comes up.
It is at this time that you can consider if you would benefit from a switch, staying with your current lender or refinancing. Begin to shop around before your renewal date to see what might work better. You may find that certain options are available to you to assist with paying your home off quicker or to lower your monthly mortgage rate.
At Mortgage Guys, we can provide you with information on mortgage loans to find out if you will benefit from refinancing or switching lenders. Let us provide you with several options to see how you can save on a new mortgage.