Mortgage Transfer - How Transferring Your Mortgage Could Give You Access To More Rate Options And Access To Equity
If you're a property owner, you may already have a mortgage with a lender. However, did you know that you have the option to transfer your mortgage to a new lender? Mortgage transfer is the process of moving your mortgage from one lender to another, and it can offer several benefits, including access to more rate options, reamortizing and equity. To explain this in more detail, Keith Uthe Demystifying Mortgages has prepared a list of benefits that you can get while a mortgage transfer.
1. What is a mortgage transfer?
A mortgage transfer is a process where you move your existing mortgage balance from one lender to another. By transferring your mortgage, you can take advantage of better rates, more flexible payment options, and access to equity. It’s important to note that a mortgage transfer is different from a mortgage refinance, which involves paying off your existing mortgage and taking out a new one with a different lender. the new lender will usually capitalize up to $3K of penalties or fees from the existing lender into the new mortgage at the time of transfer.
2. Access to more rate options
One of the most significant advantages of transferring your mortgage is access to more rate options. When we look around and explore different lenders, we can find a rate for you that better suits your financial goals and budget. This can lead to savings in the long term, especially if you are locked into a high-interest rate with your current lender. With the prime lending rate putting variable rates at one of the highest in years, changing lenders could save you thousands.
3. More flexible payment options
When you transfer your mortgage to a new lender, you may have access to more flexible payment options, such as prepayment options and the ability to skip a payment. Prepaying your mortgage can help you save money on interest and pay off your mortgage faster. Some lenders may also allow you to make lump-sum payments or increase your regular payment amounts, giving you more flexibility and control over your mortgage payments. Additionally, some lenders may offer a "skip-a-payment" option, allowing you to skip a payment without penalties.
This can be useful during times when you may be facing a financial crunch or unexpected expenses. By transferring your mortgage, you may also have the option to switch to a lender that offers lower mortgage insurance premiums or alternative insurance options, which can help reduce your monthly mortgage payments.
4. Access to Equity
Transferring your mortgage may also provide you with access to additional funds for home renovations, debt consolidation, or other financial needs. If you have significant equity in your home, you may be able to take out a home equity line of credit when you transfer your mortgage. HELOCS can provide you with either lump sum cash or access to cash in the future when you need cash for larger expenses, such as a home renovation project or a child's education. However, it is important to carefully consider the terms and conditions of the HELOC including interest rates and repayment terms, as they may be different from your primary mortgage.
5. What about my rental property?
There are even possibilities to transfer rental property mortgages and obtain savings. Each property and mortgage has to be considered on its own. We need to consider the loan-to-value(LTV), remaining amortization, is the current mortgage a collateral charge, property type, or was the property a former primary home as part of determining which lenders and options apply.
6. What advantage is there to re-amortizing?
If your current mortgage is a collateral charge mortgage lenders will consider re-amortizing the mortgage to 25 or 30 years(lender dependent). How do you know if your mortgage is a collateral charge? The easiest way is to look at your original mortgage document or check the property title. A collateral charge is when the lender has registered the mortgage for equal to the property value, purchase price or greater.
7. When to consider transferring your mortgage
Transferring your mortgage is an option to consider if you’re looking to save money on interest rates, want more flexible payment options, or need access to equity in your home. It’s also worth considering a mortgage transfer if you’re nearing the end of your current mortgage term and are looking to renew with a new lender. However, it’s crucial to weigh the costs of transferring your mortgage, including fees and penalties, to ensure it’s the right financial decision for you.
If you’re looking for a mortgage broker, consider reaching out to Keith Uthe Demystifying Mortgages. Unlike an agent in the bank, I represent you the client to many different lenders to find you the best terms for your mortgage and make sure you understand what those terms mean. This should be as important as the rate when making your borrowing decision. As a home buyer, this is the single largest investment and borrowing decision you will make at any one time and you should have someone independent of the lender in your corner looking out for you. This is why you need to be considering more than just the mortgage rate ensuring your mortgage offers you flexibility and freedom at minimal cost for those unexpected moments that happen in life.
Whether you are a First-Time Home Buyer, Buying your next home or seeking to Refinance Keith Uthe has many Mortgage Solutions to consider. Serving clients throughout Canada to help them create a 'Financial Life by Design'.
Get in touch with us today!