What is a mortgage switch?
Under mortgage switch, a borrower can shift from an existing mortgage to another. It is also called as remortgage or refinancing. Using mortgage switch, you can pay off the debts of one mortgage through the proceeds of a new mortgage, utilizing the same property as collateral.
Who opts for mortgage switch?
Some people opt for remortgages in dire circumstances, for e.g., to prevent an impending foreclosure or because their current mortgage deal term has almost expired and they have a significant sum outstanding. Meanwhile, there may be others who are stuck in a bad deal carrying high monthly payments and have found another mortgage to bail them out of the current financially bleeding mortgage.
Is it worth to make the switch?
There is no clear-cut, straight answer to this question. Before making the switch, there are several issues that need to be sorted, starting from whether your current lender will charge you any prepayment fees or early-redemption fees. These are fees charged by a lender if the borrower leaves the mortgage earlier than the originally agreed period. This is naturally a compensation to make up for the remaining monthly interest payments the lender will be missing out on.
Check the points and other fees chargeable by the new lender in case of a remortgage. This will help you in calculating whether the new refinanced loan is actually cheaper for you or not.
When to make the switch?
The cost efficiency of most mortgage switch deals is dependent on market interest rates. Borrowers, who currently have a variable-rate mortgage and vice-versa, face a major dilemma in deciding the right time to execute a mortgage switch. The best time to make a switch would be at a time when it results in savings. The trick lies in getting the timing right. You can take the help of professionals for this purpose.
Since, variable-rate mortgages have repayments that fluctuate on the basis of prevailing market conditions, they will be beneficial when interest rates are falling or are at a low level. In such cases, payments will also fall. Similarly, variable-rate mortgages become expensive when the interest rates rise.
In case of fixed-rate mortgages, the borrower is given a fixed repayment amortization schedule for a period of time, irrespective of the market conditions. Thus, if the interest rates rise, then the mortgage holder will be potentially saving money. However, in case of falling rates the opposite holds true.
For more information, you may contact:
Allegro Mortgages Corp. - Best Broker for All Your Financing Requirements (416) 987-0008
Check out http://www.amortgages.ca/ for information on different refinancing options.
Under mortgage switch, a borrower can shift from an existing mortgage to another. It is also called as remortgage or refinancing. Using mortgage switch, you can pay off the debts of one mortgage through the proceeds of a new mortgage, utilizing the same property as collateral.
Who opts for mortgage switch?
Some people opt for remortgages in dire circumstances, for e.g., to prevent an impending foreclosure or because their current mortgage deal term has almost expired and they have a significant sum outstanding. Meanwhile, there may be others who are stuck in a bad deal carrying high monthly payments and have found another mortgage to bail them out of the current financially bleeding mortgage.
Is it worth to make the switch?
There is no clear-cut, straight answer to this question. Before making the switch, there are several issues that need to be sorted, starting from whether your current lender will charge you any prepayment fees or early-redemption fees. These are fees charged by a lender if the borrower leaves the mortgage earlier than the originally agreed period. This is naturally a compensation to make up for the remaining monthly interest payments the lender will be missing out on.
Check the points and other fees chargeable by the new lender in case of a remortgage. This will help you in calculating whether the new refinanced loan is actually cheaper for you or not.
When to make the switch?
The cost efficiency of most mortgage switch deals is dependent on market interest rates. Borrowers, who currently have a variable-rate mortgage and vice-versa, face a major dilemma in deciding the right time to execute a mortgage switch. The best time to make a switch would be at a time when it results in savings. The trick lies in getting the timing right. You can take the help of professionals for this purpose.
Since, variable-rate mortgages have repayments that fluctuate on the basis of prevailing market conditions, they will be beneficial when interest rates are falling or are at a low level. In such cases, payments will also fall. Similarly, variable-rate mortgages become expensive when the interest rates rise.
In case of fixed-rate mortgages, the borrower is given a fixed repayment amortization schedule for a period of time, irrespective of the market conditions. Thus, if the interest rates rise, then the mortgage holder will be potentially saving money. However, in case of falling rates the opposite holds true.
For more information, you may contact:
Allegro Mortgages Corp. - Best Broker for All Your Financing Requirements (416) 987-0008
Check out http://www.amortgages.ca/ for information on different refinancing options.
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