Posted on: 19-02-11 15:24:57
I have a Scotia STEP mortgage, which will come up for renewal in future. I would like to re-finance by moving to another financial institution or shop for better rates. I have heard that STEP mortgage is difficult to transfer compared to a regular mortgage, although it is not impossible.
How much does it cost to transfer a STEP mortgage to another bank?? What is the process, does a lawyer have to do it?
Thanks.
Quote:
Originally posted by kulb
I have a Scotia STEP mortgage, which will come up for renewal in future. I would like to re-finance by moving to another financial institution or shop for better rates. I have heard that STEP mortgage is difficult to transfer compared to a regular mortgage, although it is not impossible.
How much does it cost to transfer a STEP mortgage to another bank?? What is the process, does a lawyer have to do it?
Thanks.
Most mortgages are registered as a simple change and are assignable and transferable. Hence at the time of renewal these mortgages can easily be transferred to another institution as the mortgage is not fully discharged but the benefits are assigned to the new lender and this does not need the services of a solicitor, so the new lender picks up the costs of assignment.
However, Scotia's STEP mortgage is registered as a collateral mortgage and generally has a HELOC component attached is not transferable. The mortgage charge has to be discharged and a new charge is registered by the new lender for which generally the services of a solicitor are required. This costs more money and hence the new lender does not eat up the costs and treats this mortgage as a refinance and you have to pay the legal and appraisal costs. These costs can be up to $1000 and you have to borne these, though there are some lenders right now who have a promo and may bear part of these costs if you agree to use the services of their title insurance company.
The procedure is simple. You apply for a refinance at the new lender, get approved and then the solicitor takes care of the documentation, gets the pay out statement from your existing lender and switches the mortgage at the time of renewal.
-----------------------------------------------------------------
Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Hello Pramod ji,
Thanks a lot for the detailed response. I wish I had known about the drawbacks of STEP mortgage, then I would have never opted for it. The bank never explained me anything regarding the disadvantages of STEP at the time of doing the paperwork. It was my first mortgage, so I have learnt from this experience. Eventually, when the mortgage renewal is due, I will contact you for refinance options as you are an expert in the mortgage business.
Regards.
Quote:
Originally posted by kulb
Hello Pramod ji,
Thanks a lot for the detailed response. I wish I had known about the drawbacks of STEP mortgage, then I would have never opted for it. The bank never explained me anything regarding the disadvantages of STEP at the time of doing the paperwork. It was my first mortgage, so I have learnt from this experience. Eventually, when the mortgage renewal is due, I will contact you for refinance options as you are an expert in the mortgage business.
Regards.
Thanks.
STEP mortgage is NOT a bad product at all. In fact it could be a very good product for certain type of individuals who wants to have a re advancable mortgage for investment purposes because of the HELOC component attached to it. It can also work great for people who want to ladder their mortgage to take advantage low rates for any other fixed term than a 5 year term. In this mortgage you can have all the components such as fixed mortgage, variable mortgage and Line of credit etc. in one with different maturities.
You are welcome to call me and discuss the benefits you can take with this product and not regret on your choice.
-----------------------------------------------------------------
Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
