A deep discount online rate of say1.95 per cent would certainly be an attention getter for Brampton and GTA homebuyers and homeowners. However, once the fine print is looked at most people will not qualify for that rate. And remember that cheapest isn’t always the best!
That low rate could be for quick close mortgages only, for instance closing within 60 days. Or for those who have less than 20 per cent down payment in which case mortgage default insurance is required to protect the lender. If you have more than 20 per cent down payment, you don’t need mortgage default insurance, but your rate will be higher because the lender doesn’t have that protection. And that low rate certainly won’t apply to refinances, investment properties, and many other situations.
Rate is only part of a successful mortgage strategy. On a $500,000 mortgage, a rate difference of 0.1 per cent only equates to a difference in payments of about $25 a month. The right mortgage privileges can save you so much more than that. That’s why I always look deeper.
As they say – the devil is in the detail! Often, the lower the rate, the bigger the catch. Sometimes a cut-rate mortgage comes with higher fees, penalties, or restrictive terms, which can be costlier over the long term than a slightly higher-rate mortgage with flexible terms. That’s why to make sure you get you the best mortgage, together we’ll look at:
- The fee to break your mortgage. This is so important: there can be substantial differences between lenders. If there’s even a chance you’ll need to break your mortgage, going with a lender that has reasonable fees can save you thousands.
- Prepayment privileges. This feature can help you slam down your debt by increasing your payments and/or putting down lump sums, so you can save thousands in interest costs and shave years off your mortgage.
- Portability. You’ll want favourable terms if there is a chance you’ll move i.e. job change or growing family. You may want to take your mortgage with you to the new house to avoid penalties.
- Terms for blending. Should you later move or refinance, a blended mortgage allows you to blend the rate of your current mortgage with the rate on any additional funds you may need. This way you don’t break your mortgage and incur fees.
Important mortgage features don’t fit in a rate ad. But this is where I knuckle down to build you the right mortgage. If you see an online rate ad that catches your attention, for sure do all the research you can but then call me to discuss. I’m here to save homebuyers in Brampton and the GTA as much money as possible during their mortgage years!
