Guide to Switching your Mortgage: 6 Most Common Questions

When your mortgage comes up for renewal, it can seem to be easiest to simply renew with your current mortgage provider. However, switching your mortgage to Cambrian Credit Union could give you access to a lower rate, as well as more favourable terms. Just a bit of your time can save you thousands of dollars!

Cambrian Credit Union has financed homes in Winnipeg and Selkirk for over 50 years, so we’ve talked to a lot of homeowners about switching their mortgage.

These are the 6 most common questions we are asked about switching a mortgage:



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Question 1: What Does It Mean to Switch my Mortgage?


Switching your mortgage means transferring your mortgage to another financial institution.

There are two scenarios where you may be switching your mortgage:

  1. When your mortgage comes up for renewal (also known as “at maturity”)
  2. During your mortgage term (this is called “breaking” your mortgage term)

When your mortgage is at maturity, you can switch to another financial institution without penalty.

Switching your mortgage before maturity means that you will probably need to pay a mortgage prepayment penalty. It is important to evaluate if the savings you will get with the lower mortgage rate at the other financial institution will offset the penalties that you will need to pay. 

As soon as you apply to switch to a Cambrian mortgage, we automatically lock in our current fixed mortgage rate for you, for up to 4 months. So you can apply and then wait until your mortgage matures to switch, knowing that our fixed rate is locked in.

See full details of our Best Rate Guarantee.


And when we transfer your mortgage to Cambrian at the low rate we guaranteed for you, we’ll pay your transfer fees too!

Come talk to us about switching your mortgage!


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Question 2: Why Would I Switch my Mortgage to Cambrian?

There are plenty of reasons to switch your mortgage to Cambrian Credit Union, including:

  • A lower mortgage rate
  • Better mortgage terms
  • Personal advice & service
  • Buy local


Lower Rate

A lower mortgage rate is the most common reason to switch as it can save you thousands of dollars over the life of your mortgage.

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As an example, Ruby has an existing mortgage of $250,000, amortized over 25 years with another mortgage provider that is up for renewal. 

 
Current Interest Rate:
     5.29%
New Interest Rate:      4.95%
Current payment:
     $1,495 / month
New Payment
     $1,447 / month
 

Overall Interest Savings from Switching: $4,089 over 5-year term

Rates, payments and savings above for example purposes only. Use Cambrian’s Mortgage Comparison Calculator to see how much you can save by switching your mortgage to Cambrian.


Use Cambrian’s Mortgage Comparison Calculator to see how much you can save by switching your mortgage to Cambrian.

Better Mortgage Terms


Not every mortgage is the same.

 

Before signing on the dotted line, it is very important to understand all the mortgage terms.

For example, the ability to make extra mortgage payments to pay off the mortgage faster – either as a lump sum or monthly payments - is important to many people, but not every lender allows additional payments and some lenders place certain limits on how extra payments are made.

At Cambrian, we love helping you save money. Which is why you can choose to pay up to an additional 20% of the original mortgage balance every year, without penalty. You can make one lump sum payment or make additional payments throughout the year, whichever works best for you.

Making additional payments will save you money on interest, and will reduce the time it takes to pay off your mortgage. Here’s an example:

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Daniel’s original mortgage balance was $250,000.
 
With a Cambrian mortgage, Daniel can pay off his mortgage faster, without penalty. He can choose to make additional payments every year totalling up to 20% of his original balance, equal to a maximum of $50,000 annually.
 
If Daniel makes an extra payment of $150 every month for 5 years, he will have paid an extra $9,000 off his mortgage balance.

This means he will pay off his mortgage sooner and pay less interest.

 

Use Cambrian’s Mortgage Comparison Calculator to see how much you can save by switching your mortgage to Cambrian.

Personal Advice & Service

Many homeowners who have switched to Cambrian because of our lower mortgage rates, are pleasantly surprised to also receive our exceptional service.

 


At Cambrian, you are our member, not just a number.  We pride ourselves on getting to know you personally and making sure we provide you with the best possible options.

 

Beyond low mortgage rates and great mortgage terms, there are many benefits to being a Cambrian member, including free banking!  All you need is a recurring monthly deposit in a Premium Chequing or Savings account to say goodbye to service fees and save $222 a year.

 


Buy Local

For many people, an important consideration when choosing which business to deal with is keeping dollars in our community by supporting local.

Cambrian Credit Union is local-grown and has been part of the Winnipeg & Selkirk communities for over 50 years.  All of our products and business decisions are made in the best interest of our members and our employees, who live and work in our communities.

Cambrian employs approximately 300 staff and in 2020, gave back over $400,000 to community organizations and charities.

When you transfer your mortgage to Cambrian, you are supporting your local community.

Interested in switching your mortgage? Book an appointment to talk to a mortgage advisor.


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Question 3: What is a Mortgage Prepayment Penalty?

If you want to pay off your mortgage, make changes to your mortgage terms or transfer your mortgage to another financial institution before your mortgage term ends, you may need to pay a mortgage prepayment penalty.

This normally occurs when you have locked in a mortgage rate for a specific term, for example, 5 years, and are wanting to “break” out of the mortgage before the end of that term. 

 

How much penalty would I pay?

We recommend consulting your mortgage contract and contacting your lender directly to determine your mortgage prepayment penalty as it can be complex to calculate.  Note that penalties can vary from one lender to another.

However, as a general rule:

For a variable rate closed mortgage, often the penalty is three months of interest on your current mortgage balance. The lender may use either your current mortgage interest rate or their prime rate to calculate the penalty.

 

For a fixed rate mortgage, the prepayment penalty calculation is a bit more complicated. It is typically calculated as the higher of:

  • The Interest Rate Differential - which is the difference between: a) the interest costs using your mortgage rate* and b) the interest costs using the prevailing interest rate for the same mortgage term at the date of the prepayment. The interest costs are calculated for the duration of your remaining term.
  • Three months of interest on your current mortgage balance.

* Note that the interest rate that is used to calculate the prepayment penalty may not be your current mortgage rate. For example, if you were given a discounted mortgage rate, the terms of your mortgage could specify that the rate used to calculate the prepayment penalty will be the actual posted rate in effect when your mortgage was issued, which may increase the penalty amount. This would be indicated in the terms of your mortgage. It is important to carefully read and understand all the terms of the mortgage agreement, especially when comparing mortgages between financial institutions.


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Question 4: Are there fees for switching a mortgage?

In Manitoba, the following fees apply when you transfer a mortgage to another financial institution. When you switch your mortgage to Cambrian, we will cover all the fees indicated below.

  • Title Insurance Fees
    • Cambrian works with First Canadian Title to provide coverage that will protect you in the event of title or land survey issues.
  • Discharge Fees
    • When your transfer your mortgage, your current financial institution must give up the rights to your property.  This is known as “discharging” your mortgage.  We currently cover up to up to a maximum of $235 of discharge fees charged by the other financial institution.
  • Property Valuation Fees
    • As part of the mortgage transfer, we may require a property value appraisal to establish the value of your home.

If you incur mortgage prepayment penalties when transferring your mortgage, we can add that amount to your Cambrian mortgage so that you do not need to pay out of pocket.

To discuss switching your mortgage without paying transfer fees, book an appointment.


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Question 5: Will I save money if I switch my mortgage?

Before switching your mortgage, it is important to confirm if it is in your best interest financially, especially if you need to pay a mortgage prepayment penalty.

If your mortgage is up for renewal:
Use Cambrian’s Mortgage Comparison Calculator to compare mortgage rate options and see how much interest you could save by switching. Be sure to compare mortgage rates with the same term length and amortization period for an accurate comparison.


If you are looking to switch your mortgage before the end of your term:

  1. Use Cambrian’s Mortgage Comparison Calculator to compare mortgage rate options and see how much interest you could save by switching. Be sure to compare mortgage rates with the same term length and amortization period for an accurate comparison.
  2. Ask your current lender what your mortgage prepayment penalty would be if you switched your mortgage to another financial institution.

The difference between: 1) the interest savings and 2) the prepayment penalty amount, is the estimated savings you would gain from switching your mortgage.


Please contact a Cambrian Mortgage Specialist who would be happy to help you determine if switching would save you money.


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Question 6: How do I switch my mortgage?

Switching your mortgage is very similar to the process of getting a new mortgage.

  1. To switch your mortgage, complete our Online Mortgage Application in as little as 15 minutes, choosing the option “Mortgage Transfer”.
  2. You will meet with a Cambrian Mortgage Specialist via phone, video or in-person, to discuss the following details:
    • Review which mortgage option is best for you
    • Review the terms of your current mortgage
    • Confirm your household income (pay stub or T4)
    • Make arrangements for a property appraisal if required. Cambrian will coordinate and cover the cost of the appraisal.
  3. Once all the mortgage details are finalized, Cambrian will work with your current lender to transfer your mortgage, which usually takes about 7 – 10 business days.
  4. We will arrange for you to sign the mortgage documents and officially set up your Cambrian mortgage.
 

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