Real estate is a hot commodity and this is a highly competitive market. Prices continue to rise supply is low and demand high. Everyone wants a piece of your business from realtors & mortgage lenders to home insurance brokers. But is anyone asking you the right questions?
What’s most important to you in regard to your mortgage?
Pardon me? What the heck to you mean? Oh wait rate. It’s rate. Right?
It may not be.
It's important to understand the features of a mortgage and make sure it fits with your goals. Depending on your situation the following features may be more important than rate and save you thousands in the long run. Not all lenders offer the following features and some remove them for their ‘best’ rates.
Blend and Extend
This allows you to blend of your existing rate with the now current rate for an overall lower rate & extension on your maturity date. If your lender doesn't allow a change in the maturity date then you're locked into the remaining time left on the term. Not the end of the world but in a rising rate environment this can be extremely inconvenient.
Early Payout Penalty Calculation
This is how the penalty to payout your mortgage early or prepay beyond the prepayment privilege is calculated. Usually calculated as the greater of 3 months interest or the interest rate differential (IRD). Lenders calculate the IRD differently also. Know this before you go with a lender for those ‘what if’ situations.
Mortgage Registration
Is the mortgage registered as a non-standard charge, either a running account, or a collateral charge? If so, then it becomes harder to switch this mortgage out to take advantage of lower rates. If the lender knows you will have to incur $1,000+ in costs plus time to refinance at renewal there is less incentive to offer you best rates at that time.
Pre-Payment Privileges
The ability to pay down your mortgage or increase your payments. Lenders usually offer from 15% to 20%. Review if they allow you at anytime or just on anniversary dates. How easy is it to complete?
Portability
This allows you keep your mortgage if you move properties. Always subject to application and credit review on the new property but important if you are considering moving/upgrading prior to the end of your term.
Ongoing Support
Does the lender provide ease of access for information or changes during the term? As your broker I am always available for support – be it generic questions, annual reviews or referrals to professionals to achieve goals in other areas of your financial plan.
Ensure the professionals you are working with are asking you the right questions in regard to your mortgage. This ensures they can recommend the best product that suits your needs and goals. If you are looking for a Mortgage Professional that will do just that I would love to work with you. If you are looking for a second opinion on advice you’ve been given I would be happy to provide one.
So I ask again, what is most important to you in regard to your mortgage? Tell me!