Should you switch lenders when refinancing?

Mortgage borrowers have much to consider during the refinancing process.

However, one issue that often gets overlooked is whether to stay with the same lender.

Refinancers are paying off their existing mortgages and taking out new ones, so it only makes sense to think about whether that new loan should come from a new lender.

The right reasons

The first step when it comes to mortgage refinancing is determining why you want to go through with the process.

Are you refinancing to save money by lowering your interest rate? Are you looking to change your loan terms? Are you hoping to access your home equity?

Once you know why you're refinancing, it's time to determine who has the best options available.

Don't get attached

No matter how well you know the mortgage professional at your bank, at the end of the day, lending is a business.

Financial institutions do not allow emotion to enter the equation, and neither should you.

All too often borrowers get attached to a lender. While there's nothing wrong with enjoying the service a financial institution provides, if better options exist, they should be explored.

New lenders may offer better service

If a lender already has your business, chances are they will be less likely to offer favourable terms and speedy service, especially when compared to a lender that is hoping to secure new business.

In this way, refinancers can often find better deals by shopping around and seeing what kind of terms different lenders will offer them.

Mortgages are big business, and many lenders will go above and beyond to take on new clients.

Then again, your current lender may offer to beat the terms offered by their competitors, especially if they're losing business from too many customers switching to different lenders.

This is a good reason why you should be upfront with your lender about looking around for the best deal.