How does a mortgage transfer work in British Columbia?
What is a Mortgage Transfer?
A mortgage transfer is the process of transferring your existing mortgage from one lender to another.
This can be done to take advantage of better interest rates and terms offered by a new lender.
The new lender pays off your existing mortgage, and you start making mortgage payments to the new lender.
Transfer and Refinance? Not the same…
A mortgage transfer and a mortgage refinance are two different processes, although they both involve changing your existing mortgage agreement.
A mortgage transfer, as previously mentioned, involves transferring your existing mortgage from one lender to another. This can be done to take advantage of better interest rates and terms offered by a new lender.
A mortgage transfer DOES NOT change the total mortgage amount.
Refinance
On the other hand, a mortgage refinance involves paying off your existing mortgage and replacing it with a new mortgage agreement with the same or a new lender.
Refinancing allows you to change the terms of your mortgage, such as the interest rate, loan term, or type of mortgage.
Refinancing can be done to lower your monthly payments, shorten your loan term, access home equity, or switch from a variable rate to a fixed rate mortgage (or vice versa).
A mortgage refinance increases the total mortgage amount. This is why you must visit a lawyer or notary in order to refinance; because you must register the new loan amount.
Weigh the Costs
Both options can be beneficial for homeowners, depending on their financial goals and circumstances.
However, it’s important to weigh the costs and benefits of each option and compare rates and terms from different lenders before making a decision.
Why a Transfer May Be a Good Option at Mortgage Renewal Time
It’s a big mistake to sign mortgage renewal documents without shopping the mortgage market or getting a second opinion from a mortgage broker because it can lead to higher costs and less favorable terms.
Mortgage renewal documents typically come from the borrower’s existing lender and offer them the option to renew their mortgage for another term without needing to go through the application process again.
Just signing the doc and sending it back may seem like a convenient option but it may not be the best choice and could cost you thousands.
By not shopping the mortgage market or getting a second opinion from a mortgage broker, the borrower may miss out on better rates and terms offered by other lenders.
Additionally, the borrower’s existing lender may not offer the best rates or terms available, as they may not have the same incentive to compete for the borrower’s business as other lenders.
Conclusions and Further Thoughts
It’s important for borrowers to shop around and compare rates and terms from different lenders before signing a mortgage renewal or committing to a mortgage transfer.
Working with a mortgage broker can also be helpful, as they can help borrowers find the best mortgage options for their specific financial situation and needs.
Sincerely,
Michael
PS – One of my hobbies is blogging about mortgages, debt and government policy. During the day I’m a MORTGAGE BROKER in Kelowna, BC!
Check out the Huber Mortgage Home Buyers Guide HERE
