Before signing on the dotted line of your mortgage commitment, there are a number of items that your broker or banker should discuss with you. These terms affect more than just the interest rate you’ll be paying, the fine print can impact the costs of breaking your mortgage, how much you can contribute over and above your regular payment and what happens if you choose to move from a variable rate to a fixed rate.
Among the items to keep an eye out for, is the collateral mortgage charge. MonsterMortgage.ca has discussed this topic to great lengths in the past. The collateral charge is a condition that registers your mortgage at somewhere between 110 to 125 percent of your home’s purchase price. When it comes to your renewal, the collateral charge requires that you pay for the services of a lawyer in order to move to another lender with a better mortgage offer. The collateral charge is not the only thing to look out for. Here are a few more fine details of interest:
Depending on how long you plan on staying in your home, you may want the ability to ‘port’ your mortgage from your current place to the next one. Portability allows you to transfer your existing mortgage in the middle of your term to a new home; any monies over and above your current mortgage amount can be added at a new rate with the two amounts ‘blended’ together. A mortgage that isn’t portable would require you to break your mortgage, resulting in a penalty being paid to your bank or lender.
Posted Rates & Convertible Conditions
Many home-owners are aware that they can take their variable rate mortgage and ‘lock’ it into a fixed rate mortgage rate. Three years into your five year variable rate mortgage? Lock it into a two year rate. The question is, what rate exactly will that be? Lenders or banks that use posted rates will look to convert you into that posted rate, not the ‘actual’ competitive market rates they offer to new clients. The lenders that do not use posted rates will on the other hand offer you a competitive market rate when looking to lock in.
Land a promotion? Congratulations! You now may want to start paying down your mortgage even more aggressively than before. Has your broker reviewed with you how much, how often and in what ways you can further pay down your mortgage? Different lenders will offer different limitations on the amount of pre-payment options and amounts available to you. Home-owners who are keener on getting to zero on their mortgage faster may want to make sure to take on a mortgage product that keeps these options open to them.
Want to find out whether the mortgage your bank is offering you doesn’t fall into the fine print trap? Fill out the form at the top of the page, and get in touch with a MonsterMortgage.ca Mortgage Expert today!BACK TO BLOG FEED