7 Insider Tips You Should Know About Mortgages


More often than not, most people fail to recognize the importance of a mortgage broker and the valued insight they can give for those taking out mortgages. Since they are well informed on current matters relating to mortgage exceptions and financing rules, they can be very valuable assets to you. Thus, here are some insightful tips that mortgage brokers have given that you may not be aware of.

Getting a 5-year fixed term mortgage can grant you access to a larger mortgage


Once you sign up for a 5-year fixed term contract, you can be able to qualify for a larger mortgage which will use your contract rate to determine your mortgage. If you go with anything that is less than 5 years, your qualification will be determined by the use of the Canada Benchmark rate which is usually higher. This will reduce your mortgage amount and also lower your affordability.

You can be able to get a lower rate if features are not important

If features such as penalties and prepayments are not much of a concern to you, then you can lower your rate when searching for a mortgage.

Every lender calculates a penalty differently

While there are those lenders who will use their discounted rate, there are others who will use their posted rate when calculating your interest rate differential. Thus, this will become essential if you do decide to close your term earlier than expected.

Prepayments have different elements despite their similarity

While there are those banks which will let you pay only once yearly, there are others that will let you do it one year after the signup date and a minimum amount or ask that you make all three. Whichever the case, it will make it costly. On the contrast, there are those banks which will be flexible enough to allow you to make payment any day thus enabling you to save.

To get a better mortgage rate, close quicker

If you are able to close by the 30 days as opposed to the normal 120 days, then you might be eligible for a discount. This is because in the short term, lenders are able to predict the rates.

Switching to an accelerated bi-weekly program will reduce your amortization period

Once you switch to the accelerated bi-weekly program, you will be reducing your total interest expense and principal on your mortgage.

A collateral lean could cost you more

Unlike a standard charge which can be switched from lender to lender, a collateral lean could cost more.

Thus, you would be required to meet the legal cost and discharge fees as well as that for the new appraisal to be able to switch lender at the time of maturity. Thus, to prevent you from being deterred from incurring fees and switching, the lenders will try not to be competitive when the time for renewal comes.

Thus, when seeking out a mortgage, you should be aware of the above tips. Additionally, you can consult a mortgage broker whom you trust or you can ask for a referral. This way, when you identify a lender, you can be well informed and know which questions to ask and not be confused with all their terminologies.

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