What is a money-saving mortgage?

One of the problems in the Canadian mortgage industry is the way mortgages are advertised. Usually you’ll be teased by an exciting insured rate. If an online rate is dramatically lower than expected, chances are homebuyers are going to check it out. But the mortgage rate is only part of the equation. It’s important to balance the rate against other mortgage features such as how the early payout penalty is calculated, what pre-payment privileges they offer, and how much mortgage money they allow you to get.

What many don’t realize is that that’s the overall solution that saves money over the long term, and that the mortgage rate is only part of the story. On a $500,000 mortgage, a rate of 0.1% lower does not even equate to a savings of $500 a year. The right mortgage solution can save you much more than that.

Saving interest is not the only consideration

Saving interest is key to pounding down your debt and building your wealth. So, we definitely look at the mortgage rate – but big savings come from the little things you don’t see with an advertised rate: like finding the right combination of options, privileges and payment schedules to maximize your savings.

For example, if you can put a few hundred dollars against your mortgage principal once in a while,  you could save thousands in interest and shave years off your mortgage. That’s because if you knock down the principal even a little, every dollar you pay after that will go further.

Consider the details

Mortgage contracts are full of details that make winners and losers of Canadian homebuyers. Rates are just the lure. Generally, the lower the rate, the bigger the catch.

What I work on with you is a money-saving mortgage. Together we’ll look at:

• Prepayment privileges: those options that can help you slam down your debt by increasing your payments and/or putting down lump sums.
• Unless you’ll be there for good, you’ll want favourable rates and terms should you want to port your mortgage from one property to another.
• Fees for breaking the mortgage. This is a big one: there can be substantial differences between lenders. Remember life happens. If there’s even a chance you’ll need to break your mortgage, going with a lender that has reasonable fees can save you thousands.
• Minimizing all restrictions and fees as much as possible.
• Figuring out which mortgage solution will ensure you get enough mortgage money to create a comfortable financial picture

These key mortgage features don’t fit in a rate ad. But trust me… this is where the rubber hits the road in building the right mortgage.

Catch yourself looking at low online rates? Time to come in for a chat; let’s have a conversation about building your money-saving mortgage instead.

Want to know more about mortgage rates in Canada? Check out my blog post… Understanding mortgage rates.

And don’t hesitate to get in touch with me to chat about your own questions about mortgage rate and your own specific situation.

Photo [c] Thanakorn Lappattaranan for vecteezy.com