Is your current mortgage lender REALLY the best one for you?
Do they have your best interest at heart?
I’m not going to tell you your current lender is wrong for you. You may have made the best decision at the time, on the day you signed. But they might not be the best for you right now.
Your current lender could be pretty good. But you could now be in a position to do better!
Mortgage penalties when selling a house
Penalties, penalties, penalties.
If you’re a hockey fan – or a hockey parent here in Ottawa – you’ll know that if you’re hit with a penalty, they hurt one team and benefit the other.
When it comes to mortgage penalties, the only team that benefits is the lender, and the only team that hurts is you.
But with mortgages, the lender is also the referee; they enforce the penalty. They calculate how much it is, and they’re not always upfront about it.
The penalty you actually get hit with might be bigger – MUCH bigger – than it initially appeared. Those online calculators that lenders provide can be way off the mark when it comes time to pay up in the real world.
A good mortgage broker will start with your goals?
Did your lender ask you what your short and mid term goals were?
If you intended to make large deposits on your mortgage to pay down the principle, but you accepted an ultra-low mortgage rate with conditions that don’t allow you to make extra payments, then that rate and that mortgage isn’t right for you anymore.
When looking for a mortgage, I want to be clear on your goals first.
Variable rate vs. fixed rate mortgages
Your lifestyle can affect the type of mortgage you should get.
Without getting too technical, mortgages are ratio based. So if your ratio is tight, you can’t have much fluctuation in your mortgage payments. If there’s room in your ratio, then you can.
If you’re on a fixed income, for example, then you would want a fixed rate mortgage. The same might be true if you’re self-employed.
But if you have more room in your ratio and more disposable income, then you can take on a variable rate mortgage.
Line of credit mortgage
If you have a commission-based income, or anticipate another significant sum such as a large inheritance or investment payoff, then a line of credit mortgage might be for you.
But, again, if your mortgage doesn’t allow for extra payments, if you are too focused on getting a great rate instead of looking at all the details of the agreement, then that great rate can end up being a huge penalty.
And we both know that when it comes to mortgages, only one team benefits from penalties.
Don’t be trapped with a large penalty because the right questions are not being asked.