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What the heck is an enhanced switch and why would you need one?

Jerry has a home with a mortgage, he meets and marries June. When his mortgage is coming up for renewal, Jerry and and June decide they would like to add June to the mortgage and title. The laws from province to province can vary with respect to matrimonial homes and if it is necessary to have both spouses on the title. However there doesn't appear to be any downside to being a recognized, registered co-owner. One can't put a price on peace of mind.

Part of my role as a mortgage broker is to review my clients finances and goals at renewal and determine the best lender options. Sometimes the current mortgage lender doesn't offer the best suited mortgage product and it is necessary for me to assist a client to switch their mortgage from one lender to another. If any changes are needed such as in this case of adding June to the mortgage and title, this is called an enhanced switch. The new lender covers the legal cost of switching and registering the new mortgage but there is a cost for independent legal advise for the addition of June and requires the assistance of a lawyer.

It can take up to 30 days to complete an enhanced switch. The initial process is similar to any mortgage financing; Jerry and June complete their mortgage application, provide supporting documents to confirm income and property details. Their broker researches the lenders and determines the best option for an enhanced switch. With the approval in place, mortgage documents signed, the new lender contacts the current lender to request mortgage payout details and one of the national title companies FCT or FNF will complete the mortgage and title registration.

There are times when the switch process to the new lender is not completed prior to the previous mortgage renewal date. This would result in your mortgage being switched to an open mortgage. The open mortgage rate is higher but the the amount of interest paid for a short period of days or weeks is not significant. The open mortgage gives you the time and flexibility to complete the switch process with no mortgage penalty.

Some tips to ensure the process goes smoothly:

1. Start Early: contact your mortgage broker up to 120 days before your renewal.

2. Provide your supporting documents as quickly as possible.

3. Make an appointment to address any and all questions rather than email.

4. Sign and return mortgage documents promptly: your new lender can not proceed until they have your signed commitment.

Tonia Mercer | The Mortgage Missus Inc.

About the author,

Tonia Mercer is an independent mortgage broker. She has been in the industry for 15 years and in 2021 she launched her own brokerage The Mortgage Missus Inc.

Tonia is passionate about financial education and believes that working with independent experts is the best way to get unbiased, professional advice. She has joined forces with local independent home and auto, financial advisor, legal, appraiser, real estate service providers.

Effectively creating a concierge service for all things financial and real estate.

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