Mortgage switch or remortgaging is the technique of paying off the debt obligation from one mortgage with the proceeds from a new mortgage using the same property as a security. The main purpose of switching a mortgage is to secure a more favorable interest rate from a different lender.

As a borrower you may opt for mortgage switch for various reasons, including reducing the size of repayments or interest costs, to pay off an earlier mortgage, to raise capital, or to reduce or alter your mortgage risk. The perfect time to opt for a mortgage switch depends on many factors, like your current financial situation and expected changes, if any; the state of the economy and market indices; the remaining mortgage period, and so on. Thus, if there are only a couple of years left for your mortgage to be redeemed, then mortgage switch may not be worth at all, unless you find a considerably better deal.

One of the main reasons for refinancing is to switch to a different mortgage type. For example, you may reduce your mortgage risk by switching from an adjustable-rate mortgage to a fixed rate mortgage. An adjustable rate mortgage is indeed an attractive option, especially for first time home buyers, since low payments can be secured through low interest rate. However, interest rates on adjustable-rate mortgages fluctuate up and down on the basis of the movement of various market indices used to calculate them. By switching from an adjustable-rate mortgage to a fixed-rate one, the risk of interest rate fluctuation is removed, ensuring a steady interest rate over time. This way you can continue with a mortgage that is most beneficial for you.

The perfect time to opt for a mortgage switch depends on many factors, like your current financial situation and expected changes, if any; the state of the economy and market indices; the remaining mortgage period, and so on. Thus, if there are only a couple of years left for your mortgage to be redeemed, then mortgage switch may not be worth at all, unless you find a considerably better deal.

While the remortgaging or refinancing process seems simple and could leave you with some spare cash, don’t rush through the process. Do a complete background check of the mortgage switch document offered to you and read through the lines to discover any hidden charges or fees. Check for any penalties that might apply if you switch away from your existing lender. For example, if you are currently in a fixed or discounted rate deal, you may have to incur early redemption penalties. Similarly, you may be charged a risk premium to switch from an adjustable to a fixed interest rate mortgage, or vice versa.

Thus, it is time you pause and calculate if you are indeed wasting hundreds of dollars each year by sticking with a mortgage deal that is no longer competitive.

For more information, you may contact:
Allegro Mortgages Corp. – Best Broker for All Your Financing Requirements
(416) 987-0008
Email:info@amortgages.ca

Author Bio: Check out www.amortgages.ca for more information on mortgage switch.

Category: Finances
Keywords: best mortgage rate, mortgage, mortgage broker, mortgages in Toronto, mortgages in Ontario, mortgage