Balance mortgage rate with options, privileges and payment schedules

July 24, 2017 | By | Add a Comment

balance mortgage rate with other optionsWhat is an Interest-Saving Mortgage?

One of the problems in the mortgage industry is the way mortgages are advertised: usually by rate. If an online rate says 1.9%, chances are homebuyers are going to check it out.

What many don’t realize is that saving interest is what saves money over the long term, and that rate is only part of the story. On a $500,000 mortgage, a rate of 0.1% lower does not even equate to a savings of $500 a year. The right mortgage however can save you much more than that.

Saving interest not the only consideration

Saving interest is key to pounding down your debt and building your wealth. Yes, of course we look at rate – but real savings come from the little things you don’t see with an advertised rate: like finding the right combination of options, privileges and payment schedules to maximize your savings.

For example, if you can put a few hundred dollars against your mortgage principal once in a while,  you could save thousands in interest and shave years off your mortgage. That’s because if you knock down the principal even a little, every dollar you pay after that will go further.

Consider the details

Mortgage contracts are full of details that make winners and losers of Canadian homebuyers. Rates are just the lure. Generally, the lower the rate, the bigger the catch.

With more than 50 lenders – including most of the major banks – I can build you an interest-saving mortgage. Together we’ll look at:

  • Prepayment privileges: those options that can help you slam down your debt by increasing your payments and/or putting down lump sums.
  • Unless you’ll be there for good, you’ll want favourable rates and terms should you want to port your mortgage from one property to another.
  • Fees for breaking the mortgage. This is a big one: there can be substantial differences between lenders. Remember life happens. 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.
  • Minimizing all restrictions and fees as much as possible.

These key mortgage features don’t fit in a rate ad. But trust me… this is where the rubber hits the road in building the right mortgage.

Catch yourself looking at low online rates? Time to come in for a chat; let’s have a conversation about building your custom interest-saving mortgage!

Want to know more about mortgage rates? Check out my blog post… Understanding mortgage rates.

Filed in: Mortgage Planning | Tags: ,

About the Author (Author Profile)

I’m a Toronto Mortgage Broker. My focus is on saving people time and money in financing and re-financing their homes. Am passionate about helping people make informed choices, giving back, and helping to improve financial literacy in Canada.

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