Why transfer your mortgage?
A transfer is when a homeowner wishes to transfer his or her existing mortgage to another property.
The main advantage is, by respecting certain conditions, a penalty can be avoided if you break the contract.
It may be doubly advantageous if the interest rate of your current mortgage is lower than the market rate.
Can I transfer my mortgage?
To transfer your mortgage, it is important to determine whether it is permitted under your current contract. It’s a good idea to check the terms and conditions before committing, when you take out the mortgage. For example, there are usually deadlines for approving a transfer. More globally, some lenders do not permit transfers at all.
What if I need a higher mortgage?
The mortgage needed to purchase a new home is often higher than the one you already have.
Most lenders will do a “mix and extend”, also called a blended rate. A blended average is created between the interest rate of your current mortgage and a new rate taking into account the extra money needed, for a new term.
Think about the future
Even if you intend to remain in your new home for years, no one knows that the future holds. Make sure that your new mortgage is also transferrable in case you have to transfer the mortgage in the years to come.
Transferring to a new lender
A transfer may also mean changing the lender. Do you want to transfer your mortgage to a new lender in course of term? Your contract will usually provide for penalties in this situation. It is very important to check what fees and penalties can result from this decision. A lower interest rate will not necessarily cover these costs. Many lenders offer to assume certain fees, like assessment costs. However, this is not always the case. Make sure you ask your lender when negotiating. You could save several hundred dollars.
When renewing your mortgage, you have the option of changing the new lender, without penalty. Read our article on this topic for more information.