We understand our business and we know that every client wants the lowest rate possible, but like I always say, rate – though important, is really only one component of the best mortgage possible. I’ll prove it through a series of questions every borrower needs to have clear answers to...
How does your lender calculate penalties?
No one wants to be in this situation, but life happens, and that includes emergencies like separation, divorce, sickness, death or being forced to sell as part of an international move for work. In these situations, big banks use a formula called Interest Rate Differential, which never favours the borrower, so in an emergency, you’ll pay through the nose when your mortgage is with a major bank.
By comparison, Monoline lenders like ICICI Bank, Street Capital, First National, MCAP and CMLS are the best lenders to be with. They don’t use the same calculations as the big banks and as a result, in an emergency their penalties are dramatically lower by comparison.
Where is your lender at when it comes to pre-payment or your mortgage?
Prepayment of your mortgage is a great thing if you can do it. It reduces the length of time it takes to pay down your mortgage and can eliminate thousands of dollars in interest as well. There are many ways to prepay a mortgage and I can share them with you when we connect. Again, you really need to know where mortgage lenders stand on prepayment to ensure you get the best terms for your goals and situation. But if you find yourself with extra money, with the right mortgage you can choose to repay up to 10%, 15% or even 20% of the original principal amount of your mortgage at any time during each year of the mortgage term. Again, this can have a massive impact on mortgage and interest payments. You just need to understand where your lender stands.
Is your mortgage portable if you decide to buy and sell in the next five years?
If your mortgage isn’t portable, you will have to start the mortgage process all over again, and you could incur additional costs including a penalty to break the mortgage early as well as higher rates. Portability is a great thing if you think you might sell and buy again within this 5-year window. Also, does your lender offer bridge financing? If there is no bridge financing in place and it ends up being needed, you may have to break your mortgage, pay a penalty and then start all over again, again with the possibility of facing higher mortgage rates. This can be a costly proposition.
Does your lender register a “collateral mortgage” against your property?
A collateral mortgage is where a lender registers a higher amount than the mortgage you are actually borrowing. The lender advises clients that by doing this, they will save legal fees if they ever have to re-finance in the future. If this is the case with your lender, then you need to know that for these types of mortgages to be transferrable in the future, you will be required to pay legal fees for that to happen. Banks who register this type of charge tend to offer clients higher rates on renewal because most clients don’t have the money to pay legal fees to move their mortgage for a better rate. Collateral mortgages are something you really should know about, regardless of your rate.
These are just a few of the really important questions a real mortgage pro makes a point of answering. The bottom line is that sometimes the best mortgage goes way beyond just getting the best rate, and this is exactly what I do best.
I specialize in mortgage terms and conditions that a lot of people ignore, and as a result, I save my clients a lot of money over the life of a mortgage. I’d like to do that for you as well, so I hope you drop me a line or call me.
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