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Credit Management

A Quick Guide to Changing Your Mortgage

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Buying a home is one of the most important (and expensive) decisions of your life. Securing a mortgage can seem like a great achievement, but as time goes on it may appear that your mortgage agreement is no longer a good fit for you and your financial standings. Switching your mortgage to a different plan or different provider may enable you to avail of cheaper interest rates, more flexible payment plans, the ability to extend the term of your mortgage, avail of payment breaks, or even top up your mortgage.

Many people steer clear of changing their mortgage plan or provider because they feel it would be too difficult of a process. Some are simply not aware that it is even an option. Consider changing your mortgage today, using our quick guide below.

Compare Savings With ALL Costs Included

Many people calculate potential savings incurred by switching from their current mortgage to other mortgage plans simply by comparing the total cost of their term loan and the monthly repayments. However, switching to another mortgage plan or provider may incur additional costs. There may be a fee involved to cover the cost of breaking a fixed rate mortgage. You may also be liable for legal fees and other charges. All of these additional costs should be factored into the cost of switching your mortgage to another plan or provider. You should check the loan to value ratio of your potential new mortgage plan. It may not match your current plan, which could leave you out of pocket.

Who Will Pay The Valuation Fee/Switching Costs?

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Switching costs or valuation fees can make switching from one mortgage provider to another an expensive, infeasible option. However, many mortgage providers may offer to cover your switching costs for you to get your business. Check in advance as to whether your potential new provider is willing to pay your switching fees, as it could be a deal breaker. If your new provider does pay your legal fees or switching costs, it is a good idea to check out whether they will apply a “claw-back” if you choose to pay off your mortgage early or move to another provider. A “claw-back” means that you may be required to pay back some or all of the fees.

Check Mortgage Agreement Conditions

Carefully scan through the conditions of your mortgage agreement. Most mortgage conditions change from plan to plan and provider to provider. Check particularly for any specific penalties involved in changing plans or provider. It is worthwhile having either a legal or financial services professional read through your mortgage agreement and analyze the conditions. You want to be sure there isn’t anything that you missed or misunderstood.

Prepare to Give Your Provider Plenty of Notice

Most providers will require a minimum of 30-60 days written notice to terminate a mortgage agreement. If at all possible, try to serve your notice well before this minimum notice period. Unless you use registered post, in the event that your notice is lost in the post, mishandled, or misplaced by bank staff, the situation can become a blame game.

We hope you find this guide useful in helping you to change mortgage plan or provider! Have you ever switched your mortgage? We would love to hear any additional tips that you may have.

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