Statistics tell us that more than 80% of Canadians will determine their mortgage choice based solely upon the interest rate that they are offered. As a result then it is not hard to believe that almost the same percentage of borrowers break their mortgages before their mortgage term has matured. This incurs them significant penalties, which could have been avoided. Hopefully the points below will empower you in your future mortgage choices so that you can create wealth for a friendly future.
- It is not just about the best mortgage rate! It is about the best mortgage. The best mortgage must include the best mortgage rate and the best conditions that will facilitate your future goals. The devil is in the mortgage condition details.
- Mortgage conditions. Some of the most important mortgage conditions are:
- Collateral charge. This could cost you a foreclosure and will most certainly add costs to you.
- Mortgage penalties. How does the financial institution calculate its mortgage penalties? Not all financial institutions calculate mortgage penalties the same. This is where the hidden future mortgage costs are.
- Pre-payment privileges. How they are applied.
- Choice. Mortgage brokers by law represent you and work for you and fundamentally present choice.
- Mortgage free plan. Insist on a written, achievable plan. Financial institution exists because of the interest that we pay. That is why they have no intention of getting you mortgage free too fast
- Future plans. Your mortgage structure should allow for life changing events otherwise you would have to break your mortgage and pay a penalty.
- Term length and rate structure. This should be determined by analysis, not opinion. Your net worth, cash flow, debt service ratios, risk tolerance and market trends should all be used to determine this. If not, you will be exposed to the bank selling you a solution that suits them best.
- Education. Those who care about you should educate you and help you to optimize your credit worthiness and improve your overall financial status.
- Cash flow protection. Your mortgage should be structured in such a way that it will allow you to pay off your mortgage faster, but at the same time also protect your cash flow if you need it to.
As we can see not all things are equal when it comes to obtaining a mortgage. Work with a professional who specializes in mortgages only. The right mortgage broker will help you to spend less and create wealth.
If you’re in the process of looking for a mortgage, here are some rate opportunities to consider.