What Is A Mortgage Transfer/Switch?
A mortgage transfer/switch is when you decide to transfer your mortgage from your current lender to a new lender. The most common reason for this is to take advantage of a lower interest rate. Your outstanding mortgage balance will stay the same with a mortgage transfer/switch. You can add a maximum $3,000 to your mortgage to cover your legal costs, appraisal fees and any pre-payment penalties from your current lender, if applicable.
*Note* If you need access to more than $3,000, this would be considered a mortgage refinance.
When Should You Consider A Mortgage Transfer/Switch?
There are typically two scenarios when you would make a mortgage transfer/switch. They are:
- At your maturity date with your current lender. This is called a mortgage renewal. When your term(1-5 years typically) is maturing, it is essential to have your trusted Mortgage Broker shop the market to ensure you’re getting the best mortgage rate and terms. If you switch lenders, you will need to qualify (new docs) and there may be legal and appraisal costs. However, most lenders offer to cover these expenses in order to secure your business.
- Mid-term mortgage transfer/switch. The only time this would make sense is when interest rates are declining. A switch mid-term means you will incur a penalty with your current lender. In order for this to make sense, the interest savings must outweigh the mortgage penalty.
If your mortgage is up for renewal or you want a free evaluation after recent rate changes, contact your trusted Mortgage Broker. Using a Mortgage Broker gives you:
- Access to dozens of lenders and products including Banks, Credit Unions, Monoline Lenders, Alternative Lenders, and Private Investors
- Unbiased opinion. Brokers work for you, not the Bank
- No Cost To You – Our Service are free. We are compensated from the Lender
If you have any questions about your mortgage transfer / switch, please contact me anytime. I’m happy to answer all of your quesitons.