What is the first thing that comes to your mind when you are thinking about getting a mortgage? If you are like the majority of Canadians you probably would say: rate.
Although rate is important in terms of getting the right mortgage, it is not the only factor you should consider when determining what mortgage is best suited for you.
Mortgage Brokers have the experience and knowledge on a variety of mortgage options, and can advise you on the various advantages and disadvantages of each. This article will only touch on a few of the various options in the market, but hopefully illustrate that rate is only one piece of the puzzle.
Similar to most industries there is a large amount of jargon and idiosyncrasies that exist within the various conditions of a mortgage. At first these may appear insignificant, but if your financial situation suddenly changes these conditions may have a huge impact on what you can (or can’t) do. Take for example a condition that bonds you to the mortgage, even if you win the lottery and want to pay it out – you cannot. Prepayment privileges are often as important as rate!
On the flip side, suppose your three children are heading off to college, and you are heading for the bank (repeatedly), but the house of your dreams suddenly comes up for sale. Now some lenders allow you to amortize your mortgage over 30 or 35 years, as opposed to the usual 25 years, which means you can buy the house of your dreams and stay at a comfortable level of cash flow.
Since rate is a component of the puzzle, it should be noted that your effective rate of borrowing may be different than what you are quoted, meaning you may think you have a particular rate, but in reality it may be compounded weekly as opposed to monthly, or the variable rate that you get may increase dramatically and the fixed would have been a better option.
The examples mentioned above are just a few of the many mortgage options that are out there. My duty as an unbiased Mortgage Broker is to act somewhat as a financial planner in that I need to know your goals and possible future events so that I can assess your needs and put you into the Right Mortgage .
Karen Monteiro Principal Broker AMP
