It’s not you, it’s your mortgage. Just because you’ve agreed on a mortgage contract, doesn’t necessarily mean it’s set in stone. There are several reasons why you may be reconsidering your mortgage. Perhaps you’ve had a major change in your financial situation or maybe you’re interested in buying a new house. Or it could be because you feel your current mortgage rate is too high. Whatever the reason may be, it’s important to make sure that if you are breaking up with your mortgage, you understand how and when to call it off.
How do you know it’s the right time?
As of right now, are you satisfied with your mortgage terms and conditions and are they meeting your personal and financial needs? If you answered no or if you’re not sure, you may want to consider breaking your current mortgage contract and renegotiating a new one. Some of the benefits of renegotiating a new contact can include getting a lower interest rate and being able to possibly pay off your mortgage faster. If interest rates have fallen significantly, this would be the opportune time to renegotiate. You obviously don’t want to cancel your current mortgage if interest rates are close to or higher than your current rate that you are getting now.
Consider the risks and potential fees.
With high reward also comes a high risk. When renegotiating or terminating your current mortgage contract, you may want to speak to your lender first about the potential fees you may have to pay in order to officially cancel the contract. In most cases, you must pay the lender the amount they would have profited if you continued with the current agreement. There are also a number of fees you may have to pay including:
- Prepayment penalty fee
- Administration fee
- Appraisal fee
- Reinvestment fee
- Fee to remove the charge on your current mortgage and register a new one
- Cash back fee (if applicable)
Speak to your mortgage lender beforehand to evaluate how much you will be paying in fees before cancelling your current contract. Although you may be saving money with a lower interest rate, you may not be saving as much as you think if you wind up paying a large amount in penalty fees – possibly even more than what you would be saving.
Agreeing to a mortgage contract is a big decision. If you’re currently looking for a new house and unsure if the contract is right for you, or if your mortgage is up for renewal soon, it’s important to speak with a mortgage professional you can trust to help you make the right decision (that will work for you and your family long-term). My name is Darren Robinson and I am a mortgage broker in Barrie. When it comes to navigating the crazy world of mortgages, I am your guide. To learn more about renegotiating your mortgage and to discover if it’s the right decision for you, contact me today at 705-315-0516 and let’s set up a meeting to check out your options to see what makes the most sense.