Are There Fees When Transferring a Mortgage from TD to RBC?
Transferring a mortgage from one bank to another is a common occurrence these days as homeowners seek out lower interest rates or better service. Many Canadian homeowners have their mortgages with one of the “Big Five” banks like TD or RBC. So it’s understandable that a homeowner with a mortgage at TD might consider transferring it to RBC if they think they can get a better deal.
However, one thing that gives some homeowners pause is the idea that there might be transfer or discharge fees associated with moving their mortgage. No one likes unexpected extra fees and charges when dealing with banks! So let’s take a closer look at what fees may or may not apply when transferring a mortgage from TD to RBC.
Discharge Fees from TD
When you transfer a mortgage from one lender to another, you are essentially paying out the remainder of your existing mortgage with the first lender (TD in this case) and taking out a new mortgage with the second lender (RBC). This process is referred to as “discharging” the original mortgage.
Many banks charge-discharge fees when a mortgage is transferred out – and unfortunately, TD is no exception. TD typically charges a discharge fee of $300-400 when you transfer a mortgage to another lender.
This discharge fee has to be paid when you discharge the TD mortgage. There’s no getting around it if you want to transfer your mortgage to RBC or another lender. It’s an unavoidable cost that should be factored into your decision.
RBC Mortgage Transfer Fees
The good news is that RBC does not charge any transfer fees when you bring your mortgage over from another bank like TD. You’ll pay the discharge fee from TD, but RBC won’t hit you with any additional charges to transfer the mortgage into RBC.
So essentially the only transfer fee you need to worry about when going from TD to RBC is the $300-400 discharge fee from TD. RBC won’t add any extra costs – they’re happy to have you as a new mortgage customer!
Strategies to Reduce Transfer Fees
While the TD discharge fee is usually unavoidable, here are a few strategies that could potentially help reduce transfer costs when switching mortgages:
- The time it right – TD may waive the discharge fee if the mortgage is up for renewal soon.
- Negotiate with TD – Politely ask if they can reduce or waive the fee. Can’t hurt to ask!
- Look for promotions – Banks sometimes run promotions waiving transfer fees.
- Don’t discharge early – Avoid fees if possible by transferring at maturity.
- Shop around – Compare discharge fees between lenders.
Weighing the Pros and Cons of Transferring
While a $300 discharge fee from TD isn’t ideal, in many cases it may be worth it to transfer into an RBC mortgage with better interest rates or features.
You’ll need to weigh the pros and cons and do the math to see if the savings from the new RBC mortgage outweigh the TD discharge fee over the longer term. Even with the $300 fee, you could still come out ahead with RBC’s lower rates.
When Does It Make Sense to Transfer a Mortgage?
Transferring a mortgage can make sense in several situations:
1. You Can Get a Lower Interest Rate
This is one of the most common reasons to transfer a mortgage. If RBC is offering lower mortgage rates than what you have with TD, you could save significantly over the long run by moving your mortgage, even with the discharge fee. Crunch the numbers – the interest savings may outweigh the discharge cost.
2. Your Term Is Ending
If your term with TD is coming to an end, it’s a natural time to review your options and see if RBC could offer better rates or features on a renewal. This allows you to time the transfer with the maturity date and avoid paying discharge fees.
3. You’re Unhappy With TD’s Service
Poor customer service or lack of flexibility from TD could push you to take your business elsewhere. If you feel undervalued or ignored as a mortgage customer, RBC may provide a better experience.
4. Do you Want Additional Features/Flexibility?
RBC may offer perks or flexibility that TD does not. For example, RBC allows lump sum payments on fixed mortgages whereas TD does not. The ability to prepay could be worth the transfer.
5. Major Life Changes
Major changes like having a baby, getting married, or combining households may warrant reviewing your mortgage options afresh – even if that means moving lenders.
How to Transfer a Mortgage from TD to RBC
If you’ve decided to transfer your mortgage from TD to RBC, here is an overview of what’s involved:
1. Review RBC Mortgage Options
Meet with an RBC mortgage specialist or use RBC’s online tools to see what kinds of rates and terms they can offer. Get any pre-approvals needed.
2. Formally Apply for RBC Mortgage
To transfer, you’ll need to formally apply and be approved for the new mortgage with RBC. They’ll go through a full approval process.
3. Contact TD About Discharging
Let TD know you plan to discharge the mortgage and have RBC payout the remainder owing. Confirm discharge fee.
4. Finalize Details with RBC
Work with RBC on final details like mortgage amount, rates, payment schedule, and start date.
5. Discharge Date
There will be a set date the TD mortgage is discharged and the new RBC mortgage starts. RBC provides a payout to TD.
6. Register RBC Mortgage
RBC will handle registering their new mortgage on the title and setting up your new mortgage and payments.
It’s a relatively straightforward process facilitated between the two banks. Get support from your RBC mortgage specialist throughout.
What Documentation is Needed to Transfer a Mortgage?
When transferring a mortgage, you’ll need to provide some documentation both to TD to discharge the original mortgage and to RBC for the new mortgage approval:
- Photo ID like a driver’s license
- Proof of income such as recent pay stubs
- Tax documents like a Notice of Assessment
- Current mortgage statement from TD
- Home insurance information
- Details on any additional secured loans
- TD discharge statement with the payout amount
RBC may request additional documentation depending on your specific situation. They’ll let you know throughout the application process. Make sure to keep TD informed of the discharge as well.
Closing Thoughts on Transferring a Mortgage
Transferring mortgages can seem complicated, but with some research and planning it can go quite smoothly. The most important steps are to:
- Shop around and compare mortgage options
- Calculate whether savings outweigh discharge fees
- Formally apply to the new lender and provide documentation
- Communicate closely with both lenders throughout the process
While discharge fees are annoying, in many cases the long-term savings of transferring to a lower-rate mortgage with RBC or another lender make it very worthwhile. Carefully weigh your options and the potential benefits before deciding.
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