Refinancing is one of the most powerful tools Canadian homeowners have to lower their borrowing costs, tap into home equity and restructure their debt. When the time comes, I always hear the same question…
Should I stay with my current lender, or switch to a new one for a better rate?
As a mortgage broker in Kelowna, I see homeowners save thousands by exploring options outside their existing lender. In today’s competitive mortgage landscape, switching lenders during a refinance can open up opportunities you may not realize are available.
One of the biggest drivers behind switching lenders is the ability to access lower rates. Not every lender updates their pricing at the same pace, and those slight differences can add up to significant long-term savings. When you refinance, you’re essentially starting fresh with a brand-new mortgage, which gives you the freedom to shop the entire market instead of sticking with one lender.
Beyond the rate itself, different lenders offer different benefits. If your current lender’s terms don’t support your financial goals, a new lender may be a better fit.
Customer experience also matters. Refinancing can be a smooth, efficient process, or a frustrating one, depending on who you’re working with. If communication has been slow or support has been lacking with your current lender, switching may give you a more streamlined, stress-free experience.
We can discuss your situation when we talk and determine your current situation and whether a switch may make sense.
Switching lenders during a refinance can involve a few costs, and it’s essential to understand them up front. Refinancing requires new legal work, and those legal fees usually range from $800 to $2,500. The cost depends on the provider and whether you work with a lawyer ($2,500) or a bank-approved legal service (First Canadian Title).
A new lender may also need an updated appraisal, which typically ranges from $350 to $600. The lower the loan amount VS your market value, the less likely an appraisal is needed.
Even with these costs, many lenders offer incentives or rebates to help offset the switching costs. When you run the numbers, switching is often still the more cost-effective choice, especially when the rate savings are significant.
If you’re refinancing before the end of your term, a penalty is standard. The size of that penalty depends on the type of mortgage you have. Homeowners with variable-rate mortgages usually see a predictable, manageable penalty equal to three months of interest.
Fixed-rate mortgages, however, often include an Interest Rate Differential (IRD) penalty that can be larger.
But let me tell you something.
Even if the penalty looks intimidating, it doesn’t automatically mean switching isn’t worth it. A lower rate over the long term may still far outweigh the immediate cost. This is why getting an accurate penalty calculation from the lender and a cost comparison from your broker is essential.
When we discuss numbers, I will help you see the bigger picture of costs and savings. Then together we can determine whether it’s worth it for you.
Switching lenders tends to make the most sense when rate savings are meaningful, and your current lender isn’t willing to match or work with your situation.
Homeowners who want to consolidate debt into their mortgage, unlock better prepayment privileges, or access products like HELOCs often benefit from exploring alternatives.
There are situations where sticking with your current lender is the smarter call. If your penalty is exceptionally high and eats up all potential savings, it may make financial sense to wait. Some homeowners with complex income or credit situations also benefit from the flexibility their existing lender provides.
And in some cases, lenders are willing to negotiate. Staying put works best when the lender truly earns your loyalty.
Switching lenders can feel overwhelming when you’re trying to compare rates, terms, penalties, features, and lender policies. That’s where a mortgage broker comes in.
I will do all the heavy lifting for you. My job is to shop the whole market, run detailed cost comparisons, and handle the entire application and switch process from start to finish.
I look at the long-term financial impact, not just the surface-level numbers. My focus is to help you refinance with confidence and secure a mortgage that actually works for your goals.
Before you commit to staying with your current lender, it’s worth exploring all your options to make sure you’re getting the best possible deal.
If you’re considering refinancing, Matthew Jackson can help you compare the actual cost and benefits of switching lenders. When you have the whole picture, making the right decision becomes clear, and often much more profitable.
If you’re ready to see if a refinance is right for your mortgage, give me a call at 250-826-3111, fill out the contact form below or pre-approve yourself on my website today! I look forward to hearing from you soon.
Let’s get your application off the ground.
