When it comes down to mortgages in Ontario, the market is always changing, especially with the recent spike in interest rates in the latter half of 2024. As a result, the lender you chose at the start of your mortgage may no longer be the best fit for your renewal. 

This blog explains everything you need to know about mortgage terms and fees and why a decision to switch mortgage lenders could benefit you in the long term.

Reasons to Consider Switching Lenders

There are several reasons that impacts your choice to switch mortgage lenders; here are a few:

  • Lower interest rate: A lower interest rate can result in substantial savings during the mortgage period.
  • Better customer service: You may decide to switch mortgage lenders in search of improved communication and support.
  • Flexible terms: If there’s a change in your financial situation, you may require a more accommodating mortgage term.
  • Limited products: While this is not always common, limited mortgage options from your current lender may drive you to seek alternatives.

Understanding Mortgage Terms and Fees

To switch mortgage lenders can seem like a great idea, but before you make the move, it is important to review some important terms and costs involved. 

Let’s say you have found a lender that offers a low interest rate. While this sounds appealing, you should first check if your current loan charges penalties for switching early—this is known as a repayment penalty. These charges can sometimes be hefty and reduce your future savings.

Next, consider other fees. For instance, switching lenders may require a new home appraisal, which usually costs a sum of a few hundred dollars. There could also be legal fees and closing costs, which cover things like paperwork and updating your new home title. 

Think of it like when moving to another house: you might find a better home, but the costs of packing, moving and setting up again add up. So, while the decision to switch mortgage lenders might save you money, be certain that the upfront costs do not outweigh the benefits.

Make the Right Choice With Expert Guidance

Switching mortgage lenders is a big decision that requires careful thought. With so many factors to consider, like interest rates, loan terms, and fees, it is important to make sure you’re making the right move for your financial future.

Northwood Mortgage, one of Ontario’s most trusted mortgage firms, can guide you through this process. With our expertise in securing both prime and subprime mortgages, we are committed to finding the right solutions for you.

Are you unsure whether switching mortgage lenders is right for you? You can call us at (416) 969-8130 or contact us online for personalized advice on the best decision that aligns with your financial goals.