What’s more important than rate?

Mortgages_more_than_rate

It’s a common misperception that the lowest rate is the best indicator of mortgage value. It might be… but it could also cost you thousands in hard earned cash.

To put things in perspective, on a $100,000 mortgage amortized over 30yrs, the difference between 2.49% and 2.59% is only about $5/month and a mere $309 for the 5 year term. Is that really all there is to choosing a mortgage?

Most likely, the lender down the street will match the rate to get your business. Now what? Which one should you choose? The product that represents ‘best value’ is the one with term, features and privileges most relevant to your short and long term goals. We’ll discuss these in future articles.

Understand early payment penalties if nothing else. It’s different between lenders. In a recent scenario considered, breaking out of a $250,000 mortgage with identical rate and term could cost $11,070 in penalties from one of the “big 5” banks vs $2,256 from a monoline lender. A $17,000 penalty in 2014 made it to prime time news! (Full article here.)

 

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3 in 5 mortgages are broken mid term due to some life event. 60%! Will yours?

 

So, even if your next preferred lender won’t match the lowest rate, its worth considering if other features (especially early prepayment) justify paying a little extra per month to avoid thousands of dollars in penalties down the road.

 

Know your options. I want to help you find the best rate on the right mortgage product.

Want to know more? Surf at www.tellmemortgage.ca or call or email me to discuss your unique mortgage needs today!

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