A "
Switch" is the simple transfer of a mortgage in the same or lesser amount of the current
Principal to a different lender. The mortgage must not be "closed" or restricted in any way from being transferred.
Changing lenders to achieve specific financial goals has become very cheap and convenient for borrowers in the past 5 years. Most mortgage lenders now offer "no cost or low cost switches" as a matter of course, and the game is to minimize their switch-outs while maximizing their switch-ins. Once the borrowers have made up their minds to switch out, most institutions co-operate fully...they know they'll need reciprocal co-operation if a different borrower switches in from the same competitor next month!
In this section we look at the following topics:
The Dynamics of Switching
What your current lender can do and what happens legally when you change lenders.
Some of the important aspects of the switch decision:
What your current Lender can doBecause most mortgage managers are judged on the raw numbers and dollar value of mortgages won and lost, it is only to be expected that subtle pressures will be applied if you choose to switch out. Here's what to do.
What Happens Legally when you SwitchIn most cases a simple assignment of charge is registered on title. However, there can be other results achieved that are not generally known. Learn more here.
Financing Strategy for Switching
What type of mortgage you should get, and how to pay off your mortgage faster.
As an experienced homeowner and borrower, you are already very familiar with the mortgage products and services of your current lender - that is, if they have done their job in informing you. You may have looked at or considered other lenders' offerings, or even dealt with other lenders. In this section we offer:
How the Mortgage Market Works
How the bond market affects mortgage rates and how market changes can affect mortgage decisions.
In Canada, mortgage rates are set by the major financial institutions, in a "follow-the-leader" manner, with one of them, usually a major bank, taking the "leader" role. All major financial institutions earn a large part of their income on the "spread", which is the difference between loan/ mortgage rates they charge to borrowers and the rates they pay to depositors/ investors for an equivalent term.
In this section, the basic "cause and effect" factors behind these mortgage rate movements are discussed in greater depth.
How the Bond Market Affects Mortgage Rates The bond market, which is a part of the worldwide "wholesale money market" is the great leveler. It is affected by monetary and fiscal policies and economic and political changes in all the major nations of the world.
How the Lenders Manage Mortgage Rates and ProductsHow the Lenders manage their portfolio of mortgages and deposits while continuing to maintain, or increase their share of a growing mortgage market, is unique to Canada due to the nature of our financial services industry.
