What You Should Look For In A Mortgage: It’s More Than Just Rates!

How do you find the lowest interest rate for your mortgage?

This is one of the sexiest topics right now. Interest rates are at an all-time low, and Canadians are infatuated with them. A low-interest rate makes you think, “Hey! This could be my chance to really make it big in real estate!”

A low-interest rate is critical, but even more important is to make sure you’re paying the least amount of money to your bank/lender over your term. Interest rates definitely factor into this, but having a flexible mortgage with the right features will protect you and your valuable equity.

Buyer beware: some lower-rate mortgages look good on the outside but can be restrictive and come with large penalties.

For example, a low-rate mortgage with poor features, coupled with bad advice, will cost you dearly. You need to go into the mortgage process with your eyes wide open.

Here is a fascinating statistic: 60% of homeowners break their mortgage at the 36-month mark in Canada. Lenders are counting on this; paying a high penalty is factored into their projections and bottom line. Oh yes, lenders know exactly what they are doing.

So here is the million-dollar question: Regardless of the current interest rate, how do you pay the least amount of money to your lender over your term?

The answer:

You need a stellar combination of a low interest rate, flexibility, low potential penalties, and great advice.

So, here is my advice: I’m including a list of the most important features you need to investigate when looking for your dream mortgage. Starting with,

1. Prepayment Privileges: This is the ability to increase your mortgage payment and make a lump sum against your mortgage. Any increased mortgage payment and/or lump sum would go directly against your principal and reduce your amortization (length of your mortgage). Talk about savings!

2. Mortgage Penalty: Not all penalty calculations are created equal. There is a big difference between fixed vs. variable rate mortgage penalties. There is even a difference between lenders and how they calculate your penalty. Find this out before you sign on the dotted line.

3. Portability: This is the ability to move your current mortgage and interest rate to another property. This could save you thousands of dollars in potential penalties and allow you to keep your interest rate if it’s attractive.

4. Customer Service: Some lenders are better than others when it comes to customer service. This will mean different things to different people, but it’s important to know if you’ll be taken care of after your closing date.

By knowing all this small print in the mortgage details, you’re ensuring the largest investment of your life will be protected.

You need to go into the mortgage process with your eyes wide open while not getting too caught up in what is the lowest rate…your bank account will thank you later.

I would love to continue to offer your advice on your real estate journey! Please reach out to me at any time via e-mail, phone call or my website.

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Warmest Regards,

Christina Pentlichuk