If your mortgage term is nearing its end, it is time to think about a mortgage switch. Indeed, switching your mortgage provider will often work in your favour, providing you with better mortgage rates, more flexible terms, and considerable savings.
At the Chris Allard Mortgage Team, we know all the ins and outs of mortgage switches and would be delighted to guide you through the process. Whether you are looking for a lower interest rate, better repayment options, or additional flexibility, our team will help you compare deals, understand your options, and find a mortgage that suits your evolving needs.
If your mortgage term is nearing its end, it is time to think about a mortgage switch. Indeed, switching your mortgage provider will often work in your favour, providing you with better mortgage rates, more flexible terms, and considerable savings.
At the Chris Allard Mortgage Team, we know all the ins and outs of mortgage switches and would be delighted to guide you through the process. Whether you are looking for a lower interest rate, better repayment options, or additional flexibility, our team will help you compare deals, understand your options, and find a mortgage that suits your evolving needs.
Why Switch Your Mortgage?
While switching your mortgage provider may seem like extra work, you can often get a better deal if you choose to switch at renewal. Your existing lender already has your mortgage business, which means that they have less incentive to provide you with the most competitive rates and terms. As such, auto-renewing mortgage loans is usually associated with missing out on significant potential savings.
Lowering Your Interest Rate
If you find a lender who offers a lower mortgage rate than your current one, switching your mortgage provider could potentially save you thousands of dollars in interest charges over the duration of your mortgage term.
By the Numbers
Let’s say, your home is valued at $500,000, and you have a remaining mortgage balance of $375,000. The mortgage had an original amortization of 30 years, but, at the time of renewal, you only have 22 years left to pay. Your current mortgage provider offers to renew your mortgage for another 5-year term at a fixed rate of 5.10%. If you choose to auto-renew with the existing lender, your monthly payment would amount to $2,271. By the end of the 5-year term, you would have paid $89,925 in interest costs.
Instead, you decide to shop around, and our team finds another lender offering a 5-year term at a much lower fixed rate of 4.35%. If you switch your mortgage providers now, your monthly payment would drop to $2,124. At the end of the 5-year term, you would pay $77,467 in interest.
As such, by making the switch, you would save ($89,925 – $77,467) = $12,458 over the next 5 years.
Check out our mortgage calculator to see how much you could be saving with a mortgage switch.
Why Switch Your Mortgage?
While switching your mortgage provider may seem like extra work, you can often get a better deal if you choose to switch at renewal. Your existing lender already has your mortgage business, which means that they have less incentive to provide you with the most competitive rates and terms. As such, auto-renewing mortgage loans is usually associated with missing out on significant potential savings.
Lowering Your Interest Rate
If you find a lender who offers a lower mortgage rate than your current one, switching your mortgage provider could potentially save you thousands of dollars in interest charges over the duration of your mortgage term.
By the Numbers
Let’s say, your home is valued at $500,000, and you have a remaining mortgage balance of $375,000. The mortgage had an original amortization of 30 years, but, at the time of renewal, you only have 22 years left to pay. Your current mortgage provider offers to renew your mortgage for another 5-year term at a fixed rate of 5.10%. If you choose to auto-renew with the existing lender, your monthly payment would amount to $2,271. By the end of the 5-year term, you would have paid $89,925 in interest costs.
Instead, you decide to shop around, and our team finds another lender offering a 5-year term at a much lower fixed rate of 4.35%. If you switch your mortgage providers now, your monthly payment would drop to $2,124. At the end of the 5-year term, you would pay $77,467 in interest.
As such, by making the switch, you would save ($89,925 – $77,467) = $12,458 over the next 5 years.
Check out our mortgage calculator to see how much you could be saving with a mortgage switch.
Gaining Flexibility with Terms
Switching your mortgage provider is also an excellent chance to secure different terms and conditions that align better with your financial goals. From prepayment privileges to amortization options, there is a lot to keep in mind when choosing your perfect mortgage loan, – and Chris Allard Mortgage Team will be happy to guide you through all the steps of this process.
- Renewal flexibility: Oftentimes, switching to a new lender provides you with more flexible renewal terms, such as shorter fixed periods. This means that you would be able to adjust faster to future rate changes. For instance, if the rates drop, you would be able to renew your mortgage sooner, benefitting from the new, lower rates.
- Rate types: If your current mortgage provider offers limited rate options, making the switch can give you access to additional rate types, such as variable or hybrid rates. If you are not sure which mortgage rate type will suit your needs best, don’t hesitate to reach out to us for a free consultation.
- Prepayment privileges: If you are trying to pay off your mortgage sooner, consider switching to a lender that offers better prepayment privileges. Whether it involves an option to increase regular payments or making lump-sum contributions at certain intervals, prepayment privileges will enable you to pay off your mortgage faster and, therefore, reduce the interest costs over its lifetime.
- Amortization options: Doing a mortgage switch may also enable you to either shorten or extend your mortgage amortization period. With a shorter amortization, you will be able to repay the loan faster, albeit with larger regular payments. A longer amortization period, on the other hand, will reduce your regular payments to help you stay within your budget and accommodate your financial situation.
- Portability features: If you are planning to sell your home and move before your mortgage term expires, it is important to switch to a lender who offers better portability options. This can save you from breaking your mortgage and paying associated penalties.
Gaining Flexibility with Terms
Switching your mortgage provider is also an excellent chance to secure different terms and conditions that align better with your financial goals. From prepayment privileges to amortization options, there is a lot to keep in mind when choosing your perfect mortgage loan, – and Chris Allard Mortgage Team will be happy to guide you through all the steps of this process.
- Renewal flexibility: Oftentimes, switching to a new lender provides you with more flexible renewal terms, such as shorter fixed periods. This means that you would be able to adjust faster to future rate changes. For instance, if the rates drop, you would be able to renew your mortgage sooner, benefitting from the new, lower rates.
- Rate types: If your current mortgage provider offers limited rate options, making the switch can give you access to additional rate types, such as variable or hybrid rates. If you are not sure which mortgage rate type will suit your needs best, don’t hesitate to reach out to us for a free consultation.
- Prepayment privileges: If you are trying to pay off your mortgage sooner, consider switching to a lender that offers better prepayment privileges. Whether it involves an option to increase regular payments or making lump-sum contributions at certain intervals, prepayment privileges will enable you to pay off your mortgage faster and, therefore, reduce the interest costs over its lifetime.
- Amortization options: Doing a mortgage switch may also enable you to either shorten or extend your mortgage amortization period. With a shorter amortization, you will be able to repay the loan faster, albeit with larger regular payments. A longer amortization period, on the other hand, will reduce your regular payments to help you stay within your budget and accommodate your financial situation.
- Portability features: If you are planning to sell your home and move before your mortgage term expires, it is important to switch to a lender who offers better portability options. This can save you from breaking your mortgage and paying associated penalties.
Reducing Monthly Payments
One of the most obvious benefits of switching your mortgage is the opportunity to reduce monthly payments. Whether you are looking to manage unexpected expenses, free up some cash for other financial goals, or simply create more breathing room in your budget, undergoing a mortgage switch can help you meet your financial goals.
There are two fundamental ways, in which a mortgage switch may result in lower monthly payments:
- Decreasing interest rate: If your new mortgage provider offers lower interest rates, your monthly payments will decrease, given that you keep the same mortgage amortization and payment frequency.
- Increasing mortgage amortization: By refinancing with a new mortgage provider, you may be able to stretch your amortization period, thus decreasing the amount you pay each month. While doing so may lead to greater interest costs over the lifetime of the mortgage, it will decrease the immediate monthly payments to help you stay on track with your finances.
Reducing Monthly Payments
One of the most obvious benefits of switching your mortgage is the opportunity to reduce monthly payments. Whether you are looking to manage unexpected expenses, free up some cash for other financial goals, or simply create more breathing room in your budget, undergoing a mortgage switch can help you meet your financial goals.
There are two fundamental ways, in which a mortgage switch may result in lower monthly payments:
- Decreasing interest rate: If your new mortgage provider offers lower interest rates, your monthly payments will decrease, given that you keep the same mortgage amortization and payment frequency.
- Increasing mortgage amortization: By refinancing with a new mortgage provider, you may be able to stretch your amortization period, thus decreasing the amount you pay each month. While doing so may lead to greater interest costs over the lifetime of the mortgage, it will decrease the immediate monthly payments to help you stay on track with your finances.
Steps to Switching Your Mortgage
Switching to a new mortgage provider is a fairly straightforward process, albeit there are a few details worth keeping in mind when making the decision.
Understanding Penalty Fees
If you are in the middle of your current mortgage term, switching your mortgage provider will lead to penalty fees with the current lender. Depending on your current mortgage contract and conditions, you will need to pay a certain amount of “prepayment penalty” on top of all other fees.
Typically, the prepayment penalty for variable-rate mortgages will equal 3-months’ worth of interest. For fixed-rate mortgages, the penalty will usually equal either 3 months’ interest or the interest rate differential, whichever is higher. Whatever your prepayment penalty amount, make sure to factor it into the cost-benefit analysis when deciding whether to make the switch.
Comparing Offers
The key to a successful and beneficial mortgage switch is to find a lender who can offer you better mortgage rates and terms than your previous one. While you can always do your own research and compare rates and offerings from various mortgage providers, it is better to work with a licensed mortgage broker like the Chris Allard Mortgage Team. Working with a broker doesn’t cost you anything but offers a plethora of benefits, from professional advice to negotiation on your behalf to secure the best possible terms.
Application Process
Once you find the right mortgage offer, you can begin the formal application process:
- Submit application: Gather all the necessary documents and submit a formal mortgage application to the lender of your choice. If you choose to work with a broker, they will guide you through all the documentation requirements and apply on your behalf.
- Accept the offer: If you are approved for the mortgage, you can accept the deal and sign the agreement.
- Acquire a payout statement: The payout statement outlines the total amount owed on your mortgage as of the closing date with the new lender. This statement will be requested by the title company closing the mortgage and will be sent to your new lender.
- Sign the documents and pay the fees: Finally, you will need to sign all the documents under the supervision of a signing officer prior to closing. Any related fees will also be collected at this step.
Common Concerns When Switching Mortgages
Switching your mortgage may be a little more complicated than described above in some situations. For instance, if you are making drastic changes to your mortgage terms, you may need to “refinance” your mortgage rather than “switch” it. In other cases, if you have a collateral mortgage, you would need to hire a real estate lawyer to discharge the mortgage, which may involve additional legal fees.
If you are worried about the complexities associated with a mortgage switch, don’t fret! Whatever the situation, working with an experienced mortgage broker like the Chris Allard Mortgage Team will help you complete the transition smoothly and meet your financial goals.
Why Choose Chris Allard for Your Mortgage Switch
As one of the most highly respected mortgage professionals in Ottawa, Chris Allard and his team bring extensive experience to the table, offering personalized service, thoughtful advice, and the best rates on the market. With our help, you will be able to complete your mortgage switch quickly and stress-free and enjoy better mortgage rates and terms in no time. Contact us today to get started!
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