Maybe you are aware, perhaps not, but it is a reality that you lender can sell your mortgage deal to the other lender. It is common in the mortgage industry, and there is also a possibility that your current lending company may not even be informed about that. Never get panic if you come to know about the selling of your mortgage deal to the other provider.
Why do lenders sell a mortgage?
The fact is that for the mortgage lenders, a property loan is their asset, and they can sell it for their own business and profit concerns.
Two prime reasons for which a lender sells a property loan are –
- When a lender transfers a deal to the other loan provider, it gets money in return. The attained funds can be used to lend to the other borrowers.
- Lenders make more money by selling a mortgage. When they lend you, they get origination fee, earn interest from monthly repayments, and when it sells, the current lender gets the commission. A small part of the rate of interest that the borrower pays goes to the first lending company.
What happens to the borrower after that?
The fact is that nothing wrong happens to the loan bearers as they have their rights secured under the law. If something like this has happened to you, do not worry.
If you think that the total or monthly cost of your loan will increase after the shift to the new provider, you are wrong. Nothing messy happens, and things do not get derailed from normalcy.
- The terms and conditions apply to your loan will remain the same as they are protected by law.
- No adverse effect will happen to your credit rating.
- Regarding repayments, fixed-rate mortgages remain the same in monthly instalments. In variable rates, the repayments change only according to the change in the prices of the original loan.
In case of any difference, the new lender needs to inform you
If the terms and conditions get tailored, the new mortgage company will have to tell you.
- Information about any possible change in the interest rates will be sent to you through official letter and e-mail.
- Any considerable alteration in the terms and conditions will be done after informing you.
How can you predict the possibility of mortgage sale?
There is no precise way to anticipate the sale of your mortgage. However, you can at least make up your mind beforehand for any such thing while applying for the loan. Usually, it is advisable to ask your mortgage broker for the possibility of any such thing. While you are in the process of searching for the right deal, the brokers usually say to their customers. They inform about the existing culture of mortgage sale.
So the conclusion is
You need to understand that selling/transfer of a mortgage from one lender to the other is regular. You do not need to worry about anything because borrower always remains on the safer side.