Mortgage Renewal & Switch
When Can I Switch My Mortgage?
When your mortgage term is nearing its end, which can typically range from one to five years, you have the opportunity to switch lenders to potentially secure a better interest rate or features. It’s best to start exploring your options at least four months before your maturity date. If your mortgage balance is less than 70% or greater than 80% of the market value of your property, you may be able to qualify for a more competitive offer from a new lender, as this is considered a lower risk loan. This can lead to lower interest rates and potential cost savings over the life of your mortgage.
My Term Is Not Up Yet And I Am Paying A High Interest Rate
When considering switching to a lower interest rate, it is important to assess the cost of breaking your current mortgage term. If you have a variable rate mortgage, your penalty is typically capped at 3 months’ worth of interest. However, if you have a fixed rate mortgage, the penalty is usually higher. It is recommended to consult with your mortgage broker to determine if it is financially beneficial to break your current term and pay the penalty for a lower interest rate. It’s important to weigh the cost of the penalty against the savings of a lower interest rate over the remaining term of your mortgage.
You Will Still Need To Qualify If You Switch Lenders
Obtaining approval for a mortgage refinance is a process that involves gathering and submitting documentation such as employment letters, pay stubs, mortgage statements, and property tax statements. The approval timeline for a mortgage refinance is typically around five business days. Once you are approved, all necessary documents are updated by a lawyer and any outstanding mortgage balances are paid out. The new mortgage interest rate will be applied for the remaining term of the mortgage. It is important to note that the approval process for a mortgage refinance is similar to that of obtaining a first mortgage.
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