Many people believe that the lowest rate mortgage is the best kind. While there is obviously merit to saving on interest, rate is not the only variable that can save or cost you money. There are real reasons as to why a broker will tell you that there is more to the question- what is your best rate.

With all the advertisements on the internet for best rates, now than ever it is more important to have a dedicated licensed mortgage professional otherwise you may very well end up paying much more for your mortgage. When you see a red hot rate you can be sure there are many provisions to that rate, and although these products offer some really great competitive rates, it is important to make sure you understand the fine print as many of these kind of low rate products do not have the kind of features that a full product may offer. It is the lack of features the tend to cost Canadians big dollars when it comes to their mortgages, with the highest impact most often due to payout penalties.

The discounted products usually have: 

  • Restrictions or no port and increase features.
  • Increased payment penalty such as 3% of the mortgage balance
  • No feature that allows the mortgage to be assumed
  • Limited pre-payment privileges

When a mortgage is broken before it’s term is over, there will be a pay out penalty. How these are calculated depend on what kind of mortgage you have and the lending institution from where it comes from. Depending on what bank your mortgage resides at and what type of mortgage product you have, the differences between the penalties could be thousands of dollars- for the same mortgage amount! 

Another feature that many discount products lack is the inability to provide bridge financing. Which would mean that in order to port your mortgage, you would have to move to your new home on the same day that you move out of your old one. In order to give yourself a day or two to close the transactions and move- you will have a hefty payout penalty.

As brokers at Mortgage Sisters West, we believe in educating our clients on choosing the best mortgage that fits your needs. Maybe a discount mortgage is right for you, but with us as your broker- you can be sure to know all the details in order to make an informed decision.

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