What is a mortgage?
It is an agreement between a lender and borrower where the former is given the right to possess the property in case you as owner fail to pay back the loan along with interest. Mortgage is opted for buying a property or borrows money against a home or property you already own. It is important to get the best mortgage rates Montreal from your lender so you don’t end up paying more money than other borrowers.
What is remortgaging?
Remortgage is switching lender. You will have to write an application for new mortgage and the lender will levy a number of new criteria for accepting the application and the approval criteria could be different from the earlier mortgage. When you switch lender you should consider the amount of money you will have to spend. You may be required to pay costs of appraisal of the mortgage property, setup fees, registration, discharge, transfer and assignment fees and any other administration related fees. The cost of remortgage can vary with different states or provinces and generally it amounts to $200 to $350 for discharge fee and around $70 for new registration. In this procedure you should also factor in the legal fee that you may have to pay. However you may negotiate with the new lender whether he will share some of the expenses involved in the remortgage. They may agree because they are getting a new client from whom they will earn interest. Changing lenders is cheaper than breaking your current mortgage prematurely.
Why you should not break a mortgage?
If you decide to end a closed mortgage before it lives its full term, you will have to pay in the form of prepayment fee. The fee will also apply if you decide to pay the full amount of the mortgage money before the end of the mortgage term. Such fee payments could cost you in thousands. It is alright if you have a open mortgage because you don’t have to pay prepayment. But in cases where the total cost involved in switching the loan to a new lender may exceed any benefit the new lender is offering. You should desist taking such mortgage.
How to remortgage?
You can remortgage with the same lender or to a new lender when the term closes with the current lender.
Renewing mortgage with same lender
If you are retaining your current lender it will be correct to negotiate the interest rate, especially when the interest rate has gone down in the present lending market. You should clarify about the fees and charges that can be applied in renegotiation and they must disclose what all fees they are going to levy on you in the new term. Usually the lender will send you a letter for renewal of the mortgage for another term and if it is agreeable you can continue with the current lender. However it is always ideal to negotiate some of the terms that may be favorable to you. A newly negotiated low interest rate can be integrated with the old rate and extend it to the new terms.
You may also get better interest rate with the current lender as he would be ready to match interest rates offered by the new lender in order to keep business. If you like to opt for this then be ready to provide evidence in the form of a document endorsed by the new lender. You will need the assistance of a reputed Refinancing Montreal company to get the best terms in your mortgage renewal.
Consider costs of remortgage
To ensure that you have got the right remortgaging offer you should check the following when you have been charged for the following:
- Application fee – this is for setting up a new mortgage and is also known as booking fee or arrangement
- Valuation fee – this fee is paid for evaluating the value of the property
- Solicitor fee – you will need to pay the fee to the solicitor who will manage the transfer
- Exit fee – you should confirm with the new lender whether you have to pay an exit fee or premature repayment fee if you are required to remortgage.
Make sure that you don’t suffer in the entire process thus hire a remortgage service as they are better equipped with knowledge and experience.
