Choosing Mortgage Rates & Terms: What To Look For—Besides The Rate

What Should You Look For In a Mortgage Besides The Rate?

Rates. Rates. Rates. It’s the word that is on every homebuyer’s mind lately. And we don’t blame them! Mortgage conversations, whether in the news or between co-workers, friends, or family, always seem to revolve around rates. They’ve increased rapidly in the past couple years and have a huge influence on your mortgage payments. But they also aren’t the ONLY thing to consider when shopping for a mortgage.

Here’s what else we think is important for homebuyers to look at when evaluating their mortgage options:

1. Flexibility

Having the ability to prepay your mortgage or break your mortgage without a MASSIVE penalty is an important factor to consider. Lately, we’ve been seeing Canadians take really short term mortgages with high prepayment penalties. This is a strategy that allows buyers to ‘hopefully’ take advantage of the lower rates that they anticipate will be coming.

Unfortunately, no one has a crystal ball for the future—with rates or life circumstances. What is concerning about these shorter options is the possibility of unexpected events occurring, such as needing to move closer to family or losing your job, and either being trapped in your mortgage or taking a large financial hit to get out of it.

2. The Lender and Their Service

Not all lenders are created equal. It’s important to consider which lender will provide you with the best service and streamlined access to the information you need as a mortgagor.

This may include a free and easy to use online portal to check your balance and makes payments. It may also include a direct line to get in touch with your lender rather than needing to go through a call centre.

3. Ability to Grow

When taking a mortgage you’ll need to plan for the present, but it’s also important to think about the future. How can your mortgage evolve with you as you grow your family, your career, or your investment portfolio?

Institutions that allow borrowers to add a home equity line of credit or second mortgage after your current mortgage has already funded could be good choices as they provide flexibility with your financial decisions if equity becomes available in your home.

At the end of the day, no matter which criteria is most important to you, It’s crucial to talk with your mortgage broker about the opinions available. Having all the information upfront allows you to not only know what it takes to get into that mortgage today, but also what it looks like to get out of that mortgage or grow with that mortgage in the future.

More questions? Reach out to our team!