Search RBC. Personal Banking. Contact Us Location. Related Articles. Traditional and collateral mortgages Learn More. Mortgage Types Learn More. Fixed vs. Variable Learn More. The last step in switching providers is to meet with your new lender to pay any outstanding fees that may be due outlined below.
Then your new lender will pay out your mortgage with your old lender, and issue you a new mortgage with them. These situations include:. Renewing Switching Providers When your mortgage term comes up for renewal, you have several decisions to make — one of the most important being whether you want to stay with your current lender, or switch providers and take your mortgage to a new lender.
To obtain a lower mortgage rate If another lender can offer you a lower mortgage rate than what your current mortgage provider has, switching would save you from having to pay potentially thousands of dollars in interest charges. Note : You can not change your mortgage amount or amortization period when switching providers. You can change your interest rate, payment frequency and prepayment options, but your mortgage amount and amortization period must remain the same.
If a longer amortization period makes the most sense for you when you first purchase your home, but your financial situation changes, you can always shorten your amortization. As mentioned, you can simply increase your payments or make a lump sum payment towards the mortgage principal. Also, when the mortgage comes up for renewal, you can further reduce the amortization. Shortening your amortization period or making a lump sum payment reduces the amount of interest you will end up paying overall and allows you to become mortgage free sooner.
Though restricted to certain types of mortgages, year amortizations are becoming increasingly popular. This means that many individuals who wish to become first-time homebuyers may not be able to afford the monthly payments associated with mortgages with even 25 year amortization periods.
Canadians are also carrying more debt than ever, a trend that is fueled by student loans, the rising cost of living, and poor spending habits. This means that many Canadians are already saddled with large amounts of debt, reducing the amount of money they have each month to put towards a mortgage. We will also assume a 5. All examples are calculated using terms of 5 years at a time. Please note that if you choose a variable rate mortgage , your interest rate will likely change throughout the term of your mortgage.
As you can see in the example, the difference between a 5-year amortization period and a year amortization period is significant. A mortgage broker will review your financial situation with you and help you decide which option is best suited to your unique situation and needs.
We are here to help you find the best mortgage to suit your needs. Skip to content. Posted on August 30, Josh Higgelke Uncategorized. The Key Differences Between Short and Long Amortizations There are several key differences between short amortization periods 10 or 15 years and long amortization periods 25 or 30 years that you should consider when choosing the mortgage amortization period for you.
Short Amortizations One of the main benefits of having a shorter amortization period is that you spend less time paying down your mortgage, so you are mortgage free faster. Long Amortizations The main benefit of choosing a mortgage with a longer amortization period is lower monthly mortgage payments.
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