Also known as an “assignment of charge,” a mortgage assignment is a transfer of mortgage ownership from one lender to another.
Assignments are typically used when a homeowner wants to “switch” (“transfer”) his/her mortgage to a new lender. The new lender often accepts the transfer with no legal fees required.
With an assignment, it’s important to remember that the key terms of the mortgage (e.g. the mortgage amount, amortization and loan-to-value) may not be increased.
If a borrower wishes to change lenders and also change the key terms of his/her mortgage, then an assignment typically cannot be used. In that case, a refinance is usually required (with the aid of a lawyer).
If you’re doing a “straight switch” of a regular mortgage you’ll often pay nothing but your existing lender’s discharge fee to change lenders.
If any of the following are true, then it’s possible that you’ll have to refinance to change lenders (which involves legal/registration costs):
- Your mortgage is a collateral charge or a readvanceable mortgage, instead of a standard charge
- You’re transferring into an open, 1- or 2-year fixed (some lenders don’t pay switch costs for shorter terms)
- Your old lender is not on your new lender’s “free switch” list
- You want to use your own lawyer to close instead of the lender-appointed closing company (lenders commonly use title companies to close, like FNF or FCT)
- Your loan amount, amortization, or loan-to-value is increasing
