When it comes to mortgages rate is not always a deciding factor

Cheaper not always better

Over the last two weeks, we’ve seen several lenders drop their fixed five-year interest rate.

When deciding where to place my clients’ mortgages, rate is only one piece of the puzzle. It is an important piece, of course, but not necessarily the deciding factor.

I’ve talked about this previously and feel it warrants revisiting.

Many of the mortgage lenders offer both a standard mortgage product and a cheaper no-frills mortgage. By cheaper, I mean the no-frills options are generally priced about .05 per cent less than the standard mortgage.

Differences between the standard mortgage product and the no-frills option can include:

• Higher penalty for breaking the mortgage early, either to refinance or port to another home

• Extend and blend may not be an option (ie: a refinance without penalty part way through the term)

• Any increase or port of the mortgage means a penalty charged

• Mortgage is not assumable

• Mortgage is not portable

• May require a bona fide sale to break the mortgage (ie: no early payout permitted)

I have only put clients into a low-rate option twice (at their insistence) and both times they have been in the position of needing to break those mortgages prior to maturity.

We were able to find a great solution for one of the clients, and the other had to pay a penalty she could have avoided had she chosen the standard mortgage instead.

If you have been holding off purchasing a home or refinancing your current mortgage, now may be the time to have a conversation with your mortgage person.

We have a great calculator that can show you whether it makes financial sense to do an early renewal or whether it makes more sense to stay the course with your current mortgage.

A few minutes speaking with a professional may save you thousands of dollars in the long run, or might reassure you that you are already in the right mortgage.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

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About the Author

Tracy Head and Laurie Baird help busy families find mortgage solutions. Together they have more than 45 years of experience in the mortgage industry.

With today’s increasingly complicated mortgage rules, Tracy and Laurie spend time getting to know the people they work with and help them to better understand the mortgage process. They support their clients before, during, and after their mortgage is in place.

Tracy and Laurie work closely with their clients, offering advice and options. With access to more than 40 different lenders, Tracy and Laurie are able to assist with residential, commercial, and reverse mortgages in order to match the needs of their clients with the right mortgage package.

They work closely with their clients to find the right fit, and are around to provide support for years down the road!

Contact them at 250-862-1806 or visit www.okanaganmortgages.com

Visit their blog at www.okanaganmortgages.com/blog


The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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