Mortgage-Free: How To Put Your New Funds To Use
Napolitano estimates the costs to move a collateral mortgage can be close to $1,000 after they are all added up. If you have a home equity line of credit in addition to your mortgage you very likely have a collateral mortgage. But even those who don't may still have one and it may be necessary to read the fine print on the mortgage or to call the lender to find out and determine what the costs of moving may be. To know if it is worthwhile to move lenders, you need to calculate what the savings might be compared with the cost of moving. "If its five or 10 basis points, the savings may not be there," Napolitano says. "If we're talking a quarter of a percentage point, the likelihood is there that you're better off to move it from one institution to another." Barry Gollom, vice-resident for mortgages and lending at CIBC, says while collateral mortgages can be more expensive to switch between lenders they offer flexibility in other ways. Collateral charges allow you to use the home as the basis for more than one loan and borrow more in the future more easily. "But what you can't do, as rule, is do an assignment or transfer of a collateral charge from one institution to another institution," Gollom said. Gollom adds that whatever a mortgage borrower does has to make sense in the context of their overall financial plan. "In the months leading up to the renewal or maturity date, it is a great opportunity for the client, for the individual to meet with their financial adviser and look at their whole financial plan," he said.
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