Starting the Criteria Based Mortgage Search
The search for the right mortgage to fit your needs does not necessarily end when you find the lowest rate. On the heels of the news that some major Canadian banks are lowering their mortgage rates, it is important to understand that there are more factors involved in the mortgage selection process than simply finding the bank that offers the lowest residential mortgage rate. After all, you would not choose your new home based solely on its price tag, so why would you apply this line of thinking when choosing a mortgage?
An article in the Globe and Mail, entitled Five Things To Ask Yourself Before You Sign A Mortgage, suggest home buyers consider the following factors:
- Potential penalties for paying your mortgage early
- Prepayment / Accelerated Payment Privileges
- Portable, Assumable or Static
- Risk Tolerance
- Flexibility
Of course, the right mortgage for every person is different. As an example, one couple may be purchasing their forever home and therefore may have no need for a mortgage that is portable or assumable, meaning they do not need to take their mortgage with them to their next home at the same rate (portable) or allow the new owners to assume their mortgage at the same rate (assumable). It might be more important for this couple to obtain a mortgage with little to no penalties for prepayment or accelerated payments. A starter home purchaser or someone looking at their home purchase from an investment perspective, on the other hand, may require portable and assumable features as part of their perfect mortgage solution and have absolutely no intention to make overpayments or pay off this mortgage sooner than what is decided on paper.
Canadian home buyers should consider discussing their needs and expectations with an experienced mortgage broker before making a decision about mortgage selection. Mortgage brokers work for the benefit of the purchaser, making sure that their needs are met and the best possible combinations of the above criteria are achieved.
