Switching your mortgage can help you save thousands. However, it is crucial that you must be able to choose an offer that doesn't reduce such benefits because of its higher fees and unexpected costs. That's why to help you out, below is a brief guide of what you should expect when you want to switch your mortgage.
It's important to understand that you should read the fine print when you are shopping around for a less costly mortgage. This will save you from unexpected expenses and fees.
Check the Fees
Usually, when you leave your current mortgage before it ends, it will trigger a host of fees. Because of this, you need to ask your current lender about the costs you'll have to pay if you leave. After which, you should ask new potential lenders about the fees that would apply to your new mortgage. You should consider the following:
- Interest Penalty - When your mortgage is not up for renewal, your current bank will often charge an interest penalty before you can switch. It can amount to three months' worth of interest payments, or it can be the difference between the interest rate on your current mortgage and the one that's left in your mortgage term.
- Appraisal - For your new potential lender, make sure to ask whether they will cover the cost of assessing your property's value.
- Legal Fees - Mortgages will need legal paperwork. That's why lenders hire companies to do it for them. The cost for this is often charged to you. Also, keep in mind the kind of mortgage you currently have so you'll have an accurate quote of your legal fees.
- Discharge Fee - This is an administrative fee from the lender you're leaving to remove their lien against your property.
Avoid paying more for banking services.
There are times when financial institutions provide mortgage rate deals if you move some or all of your banking products to them. Remember to compare all the fees and rates before you agree to the said deal. This is because the purpose of switching a mortgage is for you to gain advantages from it, and not the opposite.
Don't settle for less when it comes to customer service.
All clients want to be treated with the utmost respect. For this reason, warm and friendly mortgage experts who are knowledgeable and communicate well with you are one of the factors that will help you decide from several lenders. For example, you have a mortgage expert that promptly responds to calls and messages even during non-business hours. This makes a favourable impression.
Changes to health or finances can affect qualifications.
As they say, life happens, and people won't really have much control over things that suddenly occur. For example, switching jobs or incurring unexpected debt can affect your ability to qualify for a mortgage. Thus, depending on the changes you're going through, you need to consider them if you're thinking of switching. This is because your personal circumstances may not allow you to get that same discounted rate as your friend has been talking about, for instance. Thus, make sure to be honest with your application and your lender will do their best to help you qualify.
These are just some of the things you need to know if you're planning to switch your mortgage. Switching a mortgage is not an easy thing to do, which is why you should be careful about making this decision. We at Property Finance Corp can help you out. We offer renewal services such as switching mortgages for our clients. With over twenty years of experience in the industry, we can help you get the mortgage solution you're looking for. Book a consultation with us today!
Resources
https://www.moneysense.ca/spend/real-estate/5-mortgage-switch-surprises-to-avoid/
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