Who To Talk To First About Getting A Strong Mortgage?
It can be difficult if next to impossible to find the time to look for the best mortgage. Although some people consult their local Banks which is fine, I would recommend first talking with a mortgage professional at a brokerage as they work with Banks, Mono-line Lenders and Credit Unions which means they have a bigger base of lenders when searching for your next mortgage.
What You Should Consider First?
When looking for a mortgage I would always encourage you to first have a conversion about mortgage type. The reason is that if you are in the wrong product type and need to get out of your mortgage, there will be costs associated with breaking your mortgage. Once the product type is determined by discussing both your short and long-term needs then lenders can be consulted about what they can offer. This is called shopping the mortgage. There are some important elements you will want included as part of your mortgage which are as follows:
A Strong Mortgage Rate:
Although a strong mortgage rate is important and the interest rate is one of the elements that drives the mortgage payment, it should not be the only element that determines if you accept a mortgage. Typically rates with lenders are usually within a 10th of a percent so for example on a $300,000 mortgage a 10th of a percent equals $300 a year divided by the payment period (usually monthly) which equals $25 a month. Although monthly savings are important you should also make sure other keys elements like portability and prepayments privileges to name a few are part of your mortgage.
Mortgage portability allows the mortgage holder to transfer the balance of their mortgage to their new property with this current lender without paying mortgage penalties. The current lender will transfer the mortgage to the new property with the exact same payment terms remaining at the time of the transfer. This can enable to home owner to realize the savings on that mortgage element if rates currently are higher.
Mortgage Prepayment Privileges:
Mortgage prepayment privileges allow mortgage holders to prepay a portion of the mortgage principal before it is due without any mortgage penalty. This can be a great way to pay your mortgage down quicker and achieve Mortgage Freedom sooner. Prepayment privileges vary by lender in size and options. Lenders typically allow lump some payments equal to a fixed percentage of the original mortgage. These payments typically range from 10% – 25%. Some lenders will also allow such things as double up payments, increasing individual payments and or making extra payments(s). Understanding what prepayment privileges are in your mortgage is important and should be discussed with your mortgage broker.
Mortgage penalties are an important factor that many mortgage holders do not think a lot about. Most people think that they are never going to break their mortgage term so why do they care what the penalties are. In principal this makes sense but it is not the reality of mortgages today. I believe that over 75% of the time people break their mortgage before it matures. There are many reasons why they do this like; sale or purchase of a home, equity takeout, to pay off debt, marital separation, etc. You should talk to your mortgage brokerage about this before marking your decision.
There are other things to consider when finding a great mortgage like the flexibility of the product, online access to your mortgage and the service you will receive should you have any questions about your mortgage. Make sure you are armed with as many facts as possible so that you can be comfortable in making this important decision.
If you would like to discuss your options with an up coming mortgage, please contact me directly at 905-334-6328.
If you would like to view a Facebook post about what is in your mortgage please click 0n the video link.
Patrick Palmer: The Mortgage Cat
Licensed Mortgage Agent (Lic.#16000311)
South Oakville Centre, 1515 Rebecca Street, Unit c33, Oakville, ON L6L 5G8