Can your current mortgage lender affect whether you can make a switch? In my case, it did

A surprising thing happened when I went to renew my mortgage for a better rate with a big bank last month: they refused to take me because my mortgage was originally signed with an upstart provider.Ten days later, as I was nearing my renewal date, I got some bad news – my broker told me that Scotiabank wouldn’t accept a switch from QuestMortgage. Moreover, there were multiple other major lenders that she spoke with that also wouldn’t take a switch from QuestMortgage.

But the situation was inexplicable, and left me worried about what my options for switching will be in the future. My mortgage was in good standing, for a relatively cheap condoWhen I reached out to Scotiabank for this article, they declined to comment on the record about whether there’s a list of lenders they don’t allow transfers from. QuestMortgage also declined to comment on the situation.

Rob Butler, a prominent Toronto-based mortgage broker, says the vast majority of homeowners have mortgages with legacy providers, which have very similar contract terms that have been in place for decades for their loans. The terms, also referred to as charge terms in the business, are essentially the big list of terms and conditions that you sign with your lawyer when you complete on your home purchase.

Should you co-sign your kid’s mortgage? Adults born in the 1990s are co-owning homes with parents, but it comes with risksMeanwhile, new online-only mortgage companies, which are becoming more common in the marketplace, are untested when it comes to simple mortgage switches. He says some of these companies have been around for just a few years, and their clients are only just having their mortgages come up for renewal for the first time.

The biggest problem with refinancing is if you, like me, got a home with mortgage insurance. Essentially, if you purchase your home with less than a 20-per-cent down payment, then you’re required to purchase mortgage insurance, which will be rolled into your total mortgage amount. Essentially, that means you paid five figures for mortgage insurance, and you aren’t even benefiting from lower rates any more.

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