Did Someone Say Mortgage? Here’s What You Need to Know.
Wondering how to get the best mortgage rate? Get expert advice here.
There’s more to getting the best mortgage rate than looking at just one number.
One of the most common initial questions I get from clients is: “What is your best rate?” Many brokers and banks answer that question by offering their lowest 5-year fixed-rate. The reality is that, while important, the interest rate is only part of obtaining the best mortgage.
The right mortgage product isn’t just about the best rate. Prepayment privileges, prepayment charges, term, amortization, and penalties all need considering.
Consider hidden costs
Did you know that in Canada, six out of 10 borrowers break their mortgage early, at an average of 38 months? But, buried inside every fixed-rate mortgage is something called the Interest Rate Differential. While the actual calculation differs from lender to lender, in terms of dollars and cents, an IRD penalty could be upwards of 4.5% of the entire mortgage amount (even higher in some cases) if you break it early. That’s around $18,000 on a $400,000 mortgage or penalties could be as low as about $2,500, depending on the specific mortgage product.
Prepayment privileges can vary from lender to lender, too. Some allow 10% prepayment of your mortgage only on each anniversary date while others allow up to 25% and can be made on any date, if you need to break your mortgage early, this could have a significant impact on your penalty as well.
…and hidden clauses
Some “no-frills” mortgages (that usually comes with a slightly lower rate) can have “bona fide sales clauses,” which means you can’t break the mortgage unless you sell the house, or can be very restrictive numerous other ways.
Not all mortgages are created equal so the best way to figure out which mortgage is best for you is to allow a mortgage broker to assist you in choosing the right mortgage from the right lender for your specific circumstance.
Call our in-house mortgage expert, Tim Walker at
TIM L. WALKER | Mortgage Agent
Anthem Mortgage Group | Broker # M11000308