Mortgage Blog
How to change Mortgage lender
March 6, 2025 | Posted by: Sarabjit Dhuna
Changing your mortgage lender in Canada is possible, but it involves a few steps and careful planning. Here’s an outline of the process:
1. Review Your Current Mortgage Agreement
- Before considering a switch, check your existing mortgage contract for terms regarding prepayment penalties, early termination fees, or any restrictions on switching lenders. This is especially important if you're in the middle of your term.
2. Shop Around for a New Lender
- Research and compare offers from various lenders. You might consider major banks, credit unions, or private lenders.
- Evaluate interest rates, terms, fees, and additional features to find a deal that suits your financial needs.
3. Get Pre-Approval
- Once you find a lender that meets your needs, you can apply for pre-approval with the new lender. This will help ensure that you qualify for the mortgage before proceeding with the switch.
4. Assess the Costs of Switching Lenders
- There might be costs involved with breaking your current mortgage, including penalties for early repayment (unless you’re nearing the end of your term).
- Some lenders may offer 'porting' your mortgage, which allows you to transfer your existing mortgage to a new property or lender without penalties.
5. Apply for the New Mortgage
- Once pre-approved, submit a full application to the new lender. Be prepared to provide necessary documentation, including:
- Proof of income
- Credit score
- Property details
- Existing mortgage balance
- Proof of insurance
6. Close the Deal with the New Lender
- Once the new mortgage is approved, your new lender will pay off your existing mortgage. The closing process will include:
- Signing new mortgage documents.
- Paying any associated fees (e.g., legal fees, appraisal fees, etc.).
- Your new lender will handle paying out your existing mortgage and ensuring everything is settled with the old lender.
7. Finalize Your Mortgage
- After the transaction is completed, you’ll start making mortgage payments to your new lender based on the terms and rates of the new mortgage agreement.
8. Consider Timing and Fees
- Consider timing to avoid penalties (for example, aligning with the end of a mortgage term). Some people also wait for special mortgage renewal periods to make the transition easier.
- Some lenders offer incentives for refinancing, such as cashback or waived fees, so it's worth asking.
Key Points to Consider:
- Prepayment Penalties: These can be significant, so make sure you factor them into your decision.
- Mortgage Portability: Some lenders allow you to transfer your mortgage without penalties if you’re just moving to a new property.
- Refinancing: If you’re also looking to change the terms of your mortgage (e.g., extend or shorten the term), refinancing might be a better option.
If you have any question for mortgage then contact Sarabjit.
If you are looking for pre-construction homes or condos then visit our website Own Ontario Home for more properties
