So you’ve heard that you can pull a mortgage switch, and you know this means moving your present loan to another lender. But do you understand how you can do that, why you should, and when?
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rBefore you’re tempted to exchange your existing loan for the mortgage lenders are offering, be sure you understand clearly what the process is, what needs doing, and how.
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rWhy Switch?
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rDifferent people have different reasons for wanting a mortgage switch, but these two reasons are the most common:
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r1. Another lender is giving better terms and interest rates.
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r2. People are unhappy with their current terms and their current lender.
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rThese two reasons happen all the time so don’t be surprised if you’re considering switching for either of the two reasons, or both.
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rWhat Happens If You Switch?
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rSo what happens when you find the best mortgage rate available? For purposes of illustration, let’s say your new lender transfers your present balance plus whatever is left of your amortization. Suppose your outstanding balance totals $95,000 and the amortization period left is 20 years, then that is what your new lender will transfer. The new payments you will need to make will be based on those figures and the interest rate being offered.
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rCan You Go for Refinancing While Switching?
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rThe simple answer is yes. Some lenders will give you the Green lights to refinance, without incurring any fee, the original amount. There are also those who cap the amount, limiting it to either $1,000, or $4,000, or to any figure in between. A third option would be to go for total switching and refinancing, but be warned. If you go for this option, you will need to pay fees just like the ones you will need to pay when you register new mortgages.
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rHow Much Will Switching Cost You?
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rIf all that you’re doing is switching to another lender, without changing anything in your present loan, you won’t have to pay anything. You will not need to pay payout penalties or transfer fees.
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rWhen do fees enter the picture? It’s when you decide to up the mortgage amount or the amortization period, during switching. When this happens, your mortgage will need to be re-registered and you will most likely be asked to pay appraisal fees, legal charges, and the works!
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rWhat’s Involved?
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rSwitching from one mortgage to another is quite simple. Simply provide your would-be lender with the most updated mortgage statement from your present lender and the form B. This form is paperwork you received along with the legal documents of your first mortgage. Also, don’t forget to fill out your mortgage application – this is necessary!
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rGiven the right circumstances, a mortgage switch can be good for you. Don’t be so quick to change lenders, though. eWalletXpress Review your present situation and see if making a switch is indeed in your best interest. There are also times when it’s best to stick with the lender and the terms you have.
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rAllegro Mortgages Corp. – Best Broker for All Your Financing Requirements (416) 987-0008