Each person is unique, and so is their story. We’re talking about their personalities, their backgrounds, their perspectives, and their talents. But if each person is different then why do so many settle for cookie-cutter solutions when it comes to choosing a mortgage? As we all know, a mortgage is a legal contract between you and the lender, it’s important to understand that a mortgage comes with a variety of clauses designed to benefit the lender. Those same terms and conditions can feel a lot like mortgage handcuffs if you’re not careful.
It has been more than 100 years since handcuffs were invented. Simply put these are two metal rings, joined by a short chain, that are locked around a person’s wrists to prevent free movement. Through our years of experience, we’ve heard the stories all too often of well-meaning Edmonton homeowners calling us for help. They share their feelings of frustration for not understanding the fine print when they first signed their mortgage paperwork. They tell us they feel restrained by their mortgage contract and its limitations and sadly cannot escape its grip without some significant financial lock-picking. It’s easy to look online for mortgage rates but the real value of working with licensed Mortgage Brokers at Benchmark, is understanding that you do have a choice, and with the right advice, do not have to settle for a ‘one-size-fits-all’ solution.
We understand that the interest rate is only one aspect of saving money on your mortgage over the long term which is why we’ll sort through all of the mortgage options and get the right combination of features, privileges, and rates to match your unique goals.
So that you can avoid these common pitfalls in selecting your next mortgage, here are just a few things to consider when selecting your mortgage:
- Early Payout Penalties. There are lots of reasons why it makes good financial sense to break your mortgage, even though you can expect to pay a penalty. But not all lenders calculate penalties the same way, and the differences can amount to thousands. Life happens, so make sure you choose a lender that has a prepayment penalty that matches your future needs.
- 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.
- Standard or collateral security registration. When a mortgage is secured by the house and the land it sits on, it’s registered with the land titles office; this is known as a “charge.” A conventional charge secures only the mortgage loan while a collateral charge can secure other debt besides the mortgage loan, can include a mortgage and a line of credit and may be registered higher than the actual amount of the mortgage.
- 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 and keep your current rate.
- 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, while some do not offer this feature at all.
It is important to understand that while there are mortgages where the primary benefit is a low-rate, despite it coming with a few restrictions, in no way are we trying to vilify these options offered by lenders. We even recommend them to clients but always ensure they are fully aware of the limitations. We do this because we believe it’s imperative for people who choose a mortgage solely on the interest rate to know the difference in “low feature” products. Like most legal contracts, a mortgage can be very complicated. So before signing your next mortgage contract, make sure you’ve been well-advised and know the full cost of the mortgage, including the interest you will pay and any fees or penalties.
There is definitely more to getting a mortgage than just searching online for the lowest rate. It’s our job to help you find the right mortgage with the rate and flexibility you need to be a happy homeowner. You see, our Benchmark team’s primary concern is the best mortgage product, the best lender, and maximum flexibility for you. Options, options, options.
When you choose to align with our team for your home’s financing needs, we have a process that works! It’s a Benchmark thing #trusttheprocess. We’ll explain a little bit about where we’re the market seems to be going in the future in terms of interest rates. We’ll take the time to find out a little bit more about your situation, and then we’ll talk about creating a mortgage program that’s going to have the least amount of costs during the time horizon that you plan to be in the home.
So if you’re ready for a different mortgage experience. Come talk to us. We’ll get you started!