subject: The ABCs of Switching to a Different Mortgage Lender [print this page] The ABCs of Switching to a Different Mortgage Lender
When applying for a home loan, one of the most important aspects that you need to consider is whether you should switch to a different mortgage lender when the renewal time comes. Read on to find out how you can make a distinction between a discounted mortgage loan and a fixed mortgage loan, so that you can better decide which course of action is best taken.
Things to Keep in Mind when the End of Your Mortgage Contract is Nearing
If you're a homeowner and you become complacent with not reviewing your lender's contract come renewal time, you are actually passing up on the opportunity to get better rates. Remember that the trends in the real estate industry changes from time to time according to the state of the market, so you can actually shop for better rates or even switch from one mortgage type to another.
Another benefit that you can get as you switch from one mortgage type to another is the loan term can be reduced. Flexibility is your ultimate goal when switching from one mortgage type to another, so it definitely pays to check on the pros and cons of each kind before deciding which one to choose.
Types of Mortgage Loans that You Can Switch To
Now, here are the types of mortgage loans that you can switch over to:
1. Discounted Mortgage LoanAs the name implies, a discounted mortgage loan offers a discounted rate. The competition between lenders is stiff enough for you to be able to make a comparison of the rates offered by one mortgage company to another so it definitely pays to do your homework.
2. Fixed Mortgage LoanIf you currently have a variable-interest mortgage loan, you may want to consider switching over to a fixed mortgage loan. For this, the interest rate will remain the same for a previously agreed upon period, which usually lasts from one to five years.
3. Variable-Interest Mortgage LoanThe opposite of a fixed mortgage loan is one which has a variable interest rate. If you are considering switching over to this type of a mortgage loan, remember that the percentage will depend upon current market trends.
4. Tracker MortgageIf a variable-interest mortgage loan is dependent on the trends in the real estate market, a tracker mortgage will be dependent on a factor called benchmark rate.
A Final Word about Switching to Mortgage Rate
It is important to weigh the pros and cons of each type of mortgage loan so that you would have an idea which one will give you the best set of advantages. Make a deal with your present lender to gauge whether they can offer you a better deal especially if you have stuck to your mortgage loan and not delayed on any payments for the past years.
Review the payments that you made over the years, the interest rate, the remaining balance of your mortgage, the number of years left on the loan term and the cost of fully paying off the mortgage.
There is absolutely no need for you to suffer through the horrors of being indecisive when switching mortgage loans. As long as you lay out all your options on the table, you will be able to determine whether it's a tracker mortgage, variable interest or fixed mortgage loan that you need to switch to.
