Switching Mortgage Lenders at Renewal in Ontario

Start before the renewal deadline

Begin comparing options roughly 90 to 120 days before maturity. That provides time to review the existing offer, organize documents, qualify with another lender and solve title, appraisal or discharge issues without last-minute pressure. A switch completed at maturity will generally avoid an early payout penalty, but other transaction costs may still apply.

Expect the new lender to qualify the application

Renewing with the current lender may involve a simplified process. A different lender normally reviews the application under its current policy, including income, credit, debts, property, mortgage balance and payment history. Do not assume that receiving a renewal offer from the existing lender guarantees approval elsewhere.

• Current mortgage or renewal statement
• Income documents appropriate to employment or self-employment
• Property-tax information and property details
• Identification and consent for a credit review
• Statements for secured credit lines or other charges on title
• Appraisal or additional property documents when required

Understand a straight switch versus a refinance

A straight switch generally transfers the existing mortgage balance and remaining amortization without increasing the loan. Borrowing additional money, extending the amortization beyond an acceptable transfer structure, consolidating debt or making certain title changes may turn the transaction into a refinance. That can change qualification, maximum loan-to-value and available products.

Compare the costs the rate does not show

• Discharge or assignment fees charged by the existing lender
• Legal, registration or title-insurance costs
• Appraisal costs when required
• Cashback repayment or other contract obligations
• Interest adjustments caused by different payment dates
• Restrictions, portability and future prepayment penalties under the new mortgage

Choose the contract you can live with

A lower rate can be valuable, but it should not hide a restrictive contract. Compare prepayment privileges, portability, penalty calculations, standard-charge versus collateral-charge registration, payment options and how the lender would handle a future sale or refinance. The best switch supports the next term, not only the first payment.