Which mortgage features are most important?

September 5, 2017 | By | Add a Comment

best mortgage features

It’s easy to look online for a mortgage rate. But most mortgages vary only slightly on that.

So how do you decide which mortgage is best for you?

Rate is only one aspect of saving money on your mortgage over the long term. It’s essential that you also consider mortgage features. Here are the big ones that can cost you a lot of money if you skip over them:

Early Payout Penalties

It can sometimes make good financial sense to break your mortgage, even though you can expect to pay a penalty.  But mortgage lenders can vary wildly in how they calculate penalties, so beware!  The differences can amount to thousands.  Bottom line:  life happens, so make sure you choose a lender that has a fair prepayment penalty. And watch out for no-frills mortgages that don’t let you get out of your mortgage at all, unless you sell or the term is up.

Pre-Payment Privileges

You want the ability to put lump sum amounts on your mortgage and increase your payments so you can pay down your mortgage faster and save on interest. You should always consider having this flexibility even if you don’t think you’ll use it; your situation may change that gives you the ability to pre-pay. This flexibility can also help you reduce an early payout penalty.

Collateral Charge Mortgage

This type of mortgage can be difficult to transfer to another lender and cost you legal fees if you do. You are more locked in, which means your lender may not offer you the best rates if you need to refinance or at renewal. Watch out!

Porting Flexibility

This is important if there is a chance you’ll move i.e. job change, growing family. You’ll want to take your mortgage to your new place to avoid penalties. But make sure your lender lets you increase too should you buy a more expensive home.

Blended Mortgage

If you move or refinance, a blended mortgage allows you to blend the rate of your current mortgage with the rate on the additional funds. This way, you don’t break your current mortgage and incur the penalty. Some lenders blend and extend to a new 5 year term, others blend only to the remaining term, or offer both.

There is definitely more to getting a mortgage than just rate. It’s my job to help you find the right mortgage with the rate and flexibility you need to be a happy homeowner. To better understand Collateral Mortgages, check out my post that outlines the difference compared to a standard mortgage.

 

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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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