Should You Switch Your Mortgage Provider in Canada?

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Switching your mortgage provider might not sound like the most exciting task, but it could be one of the smartest financial decisions you make this year. With rates fluctuating, fees evolving, and better terms becoming available, Canadians are increasingly shopping around at renewal time to see if they can do better elsewhere. But is switching actually worth it? Let’s break it down.

Why Canadians Switch Mortgage Providers

Many homeowners stick with their current lender out of convenience, but that comfort can come at a cost. Switching providers at the end of your term can help you secure a better interest rate, gain more flexible prepayment privileges, and even save thousands over time.

Lower Interest Rates

Let’s say your current lender offers a 5.98% renewal rate. If another lender is offering 4.89%, that difference could translate to over $27,000 in interest savings on a typical $577,000 balance over a 5-year term. That’s money you could put toward your principal, retirement savings, or your child’s education.

Better Terms and Prepayment Options

Some lenders restrict how much extra you can pay each year. Others give you more breathing room—like allowing 15% or 20% lump sum payments instead of 10%. This flexibility means you can use windfalls (like bonuses or inheritances) to knock down your balance faster and cut years off your amortization.

Cost Benefits vs Fees: Is the Switch Worth It?

Switching isn’t free, but it might still be worth it.

Typical costs include:

• Discharge fee: up to $400
• Assignment fee: up to $395
• Appraisal fee: $300–$500 (sometimes waived)
• Legal fee: $250 or more
• Penalty: only if breaking mid-term; ranges from 3 months’ interest to IRD

How to Switch Mortgage Lenders in Canada

1. Find a better deal – Use comparison tools or work with a broker.
2. Apply with your new lender – This includes credit checks and income verification.
3. Get approved – The new lender will evaluate your file and issue approval.
4. Transfer funds – A lawyer or notary handles the paperwork, pays off the old lender, and completes the switch.

When Switching Gets Complicated

If you have a collateral charge mortgage, switching can feel like a refinance. Some lenders may not accept it, or they may require you to pay off other debts attached to it.

Frequently Asked Questions

Can I change my mortgage amount or amortization while switching?
Only if you refinance, which involves breaking your mortgage.

Do I have to wait until renewal?
No, but switching mid-term comes with penalties. Renewal is the best time.

Will I pay fees to switch?
Likely, but some lenders cover part or all of them to earn your business.

Final Thoughts: Should You Switch?

If your renewal letter arrives with an uncompetitive rate, don’t just sign it. Exploring your options could unlock huge savings and better terms. If you’re nearing the end of your term, talk to a mortgage expert to compare offers and make the switch stress-free.

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