When can I use FCT instead of a Lawyer for my Mortgage?

Posted on 28 November, 2019

When you purchased your home, you most likely used a lawyer to complete the transaction. Now that your renewal is coming up (or if you are considering refinancing), you may be able to do so without one. This is where First Canadian Title (FCT) or Fidelity National Financial (FNF) come in. For this blog, we will reference FCT specifically, however it is important to note that FCT and FNF can be used interchangeably.


Renewals
If you decide to renew your mortgage with your current lender, you will not require a Lawyer or FCT to complete the transaction. This is because your current lender and mortgage are already registered to the property title.
If you decide to renew your mortgage with a different lender, your renewal then becomes what is known as a ‘switch’ in the mortgage industry. Whether you have to use a Lawyer or not depends on the lender you are using as well as whether your mortgage is considered ‘high-ratio’ or ‘conventional’.

  • If your switch is high-ratio (meaning you have less than 20 percent equity in your home at renewal time), you are always required to go through FCT as opposed to a Lawyer.
  • If your switch is conventional (meaning you have more than 20 percent equity in your home at renewal time), some lenders will allow you to choose between using FCT and using a Lawyer to complete the transaction. However, it is worth noting that certain lenders require you to use FCT regardless of whether your switch is high-ratio or conventional.

Refinancing
When refinancing your mortgage (which involves dissolving your mortgage and replacing it with a new one, even if you are not changing lenders), you are given the choice to use FCT or a Lawyer depending on your preferences.

Pros and Cons of using FCT versus a Lawyer

  • FCT is often a less costly option, as your lender will generally cover your fees for a switch, and offer a reduced price for a refinance.
  • FCT is able to offer additional flexibility in comparison with some Lawyers, as they are able to meet with you at your home and offer appointments on evenings and weekends.
  • If you are on a time-crunch, Lawyers are generally able to complete the transaction much faster than FCT would.
  • Lawyers are also able to offer a deeper level of support during the transaction than FCT would; they are there to give advice as opposed to just facilitate the transaction.

Whether you should use a Lawyer or FCT is a complex question that is dependent on many factors about your specific situation. If you have questions, feel free to contact our office and speak to one of our licensed Mortgage Brokers today.


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