The decision to switch mortgage lenders is not always straightforward. There are a couple of key questions you need to ask yourself before you make the switch. Specifically, are you switching lenders before the end of your current term or are you switching at the renewal date? If you are not sure if this is a sound option, let’s connect for a quick chat to run through your current situation.
How much does it cost to switch mortgage providers?
If you are switching your mortgage to a new lender at the end of your current mortgage term, there will be no penalty charge. The only potential cost is the discharge fee your current lender charges to close your account. This generally runs between $250 and $500 depending on the lender. Discharge fees are standard for all lenders.
If you are switching your mortgage to a new lender before the end of your current term, you will have to pay a penalty plus the discharge fee. The good news is that most new lenders will allow you to capitalize (add to your current mortgage balance) up to $3,000 to help reduce out-of-pocket money. The $3,000 can be used for penalty, discharge fee, and appraisal (if required). The new lender will also pay for your legal fees to entice you over to a great new deal at a better rate and terms.
Is it worth switching mortgage lenders?
It all boils down to the savings. There are a few factors to consider when deciding if it is worth switching mortgage lenders including:
- Interest not paid to the current lender.
- Decreased contracted monthly payments.
- End of term mortgage balance owed.
How long does it take to switch mortgage lenders?
Normally, 30-days is sufficient time to switch your mortgage to a new lender. It may take a bit longer if the lending community is in a busy period.
If you’re not sure if this is the right option for you, let’s connect for a no obligation quick chat to run through your current situation. Or you can email us at [email protected] for more information.