Is it time to make a switch, or should your mortgage stay put? With so much information out there, it can be hard to decide — let alone understand the difference between renewing, refinancing, switching and blending and extending. So, let’s define each of those terms:
Switching your mortgage is easier than you think and it’s also much easier than getting your first one! These reasons may help you decide if switching is right for you.
It's important to know that if you switch your mortgage during the term, there may be a penalty from your current lender. However, you might also save more over time by switching to a new mortgage lender with a lower interest rate now.
Here are three times a mortgage trade-in could be beneficial to your financial health:
1. If your life has changed
Life changes every day, but we’re talking about big financial ones like getting married or divorced, having a baby, or changing jobs. By reviewing your mortgage interest rate with what is happening in the market you could save thousands of dollars in interest charges. This could improve your cash flow as well as potentially reduce the lifespan of your mortgage.
2. Lower rate or better terms
If you can get a lower rate than is being offered by your current lender, switching might save you in the long run. However, you will need to do the math to find out if it is worth it to you.
Another important thing to consider is the prepayment options you are offered. If a new lender can offer you better prepayment options than your current provider, switching could help you pay down your mortgage faster and save you from having to pay more in interest.
Options to consider:
3. If you have high-interest debt
If you’ve got debt on a credit card, loan, or line of credit (LOC), you’re paying interest to carry it. If you're able to consolidate your debt into your new mortgage when you trade in your existing one, you may have a lower interest rate on your payments. Also, banking will be simpler because you’ll be making one payment instead of two (or more).
Talking to one of our mortgage specialists is a great place to start. We can do the math for you so you can understand if switching your mortgage is the right choice, or if you’d be better off to blend and extend. Contact us or apply online for a mortgage today.