Transferring Your Mortgage to Another Lender
As noted above, when your mortgage is up for renewal, you can switch mortgage types. But you can also transfer your mortgage to another lender. If you switch to a different bank or credit union, there will be transfer fees involved. The type and amount of fees you pay will be different for each lender and mortgage situation.
Costs
Here are a few potential fees you might face:
- Mortgage discharge fee:Your existing lender will charge$0 - $400 to end your current mortgage agreement. The exact fee should be stated in your mortgage contract.
- Appraisal fee: Your new lender will want an appraisal done on your home. It typically costs between $150 - $500.
- Assignment fee: Your existing lender will charge $5 - $395 to switch mortgages to your new lender.
- Legal fee:Your lawyer will need to assist with legal paperwork in the transfer process. Legal fees can vary depending on the type of mortgage you have.
Some lenders will waive certain fees to get your mortgage business. Don’t be afraid to ask for fee rebates or mortgage transfer offers. For example, you can earn up to $3,000* to use towards transfer fees if you switch your mortgage to Innovation!
What if you decide halfway through your mortgage term, that you’d like to switch lenders?
You’ll most likely face a penalty if you transfer your mortgage before your maturity date. Typically, the penalty is up to three months of interest payments on the amount owing or the interest rate differential. (This is the difference between the rate you are currently paying and the financial institution's current posted rate.)
Most times, people making a mortgage switch are doing so to take advantage of a lower interest rate elsewhere. However, the penalties are probably more than the interest you’d save on making a switch before your maturity date. If you can, it’s better to wait until your mortgage is up for renewal.
