With a change in mortgage laws in Ontario, Canada, you are likely to find it difficult to strike a ‘cheap’ deal. However, it is still possible to find a more affordable mortgage plan, for which you need to learn how to shop around in a sensible way.
Many people know they should not select the first mortgage deal that comes their way, but they also do not understand the right way to shop around and compare different options. By doing more research and comparing different deals, you will be in a much better position to select the lowest interest rate. However, the real thing is to learn to look beyond those obvious interest rates. Many other factors will go into determining how affordable your mortgage becomes over the years. Along with considering the interest rate, be sure to consider the following as well:
- Do not forget to check what prepayment privileges are available. It is true that with an increase in the interest rate, you will be paying more to meet the interest rate than settle the principal amount. Therefore, it is of immense importance to select a deal that offers prepayment privileges and allows you to make large lump-sum payments to pay your loan faster. For this, you may be better off working with non-bank lenders because they are likely to offer lower rates and throw more generous prepayment privileges your way. Just be sure to consider non-traditional lenders that come with a solid track record.
- Be sure to consider penalties when taking out a loan. You should know in advance exactly what you would go through if you ever need to break your mortgage. You may wind up breaking your mortgage for many reasons – some do it after they get divorced, while others may have to do it after losing their jobs. You need to consider those unexpected circumstances because breaking a mortgage could cost you thousands in penalties. Therefore, you should practice care and read the fine print carefully. In Canada, you usually have to pay 3-month’s interest upon breaking your mortgage – that is when yours is a variable-rate mortgage. You may end up paying much more than that in case of a fixed rate mortgage – you may have to pay a much larger amount calculated considering your current mortgage rates as well as your remaining mortgage balance. So, be sure to ask your lender to explain their terms and conditions related to mortgage penalties.
In addition, you should also consider portability because it can sometimes save you from dealing with mortgage penalties. Portability means that you can transfer your current mortgage to your new home and then combine it with another loan. Similarly, you can take advantage of a feature called assemblage mortgage that gives you the facility of leaving your mortgage for another buyer. So, be sure to conduct your research and take advantage of every feature to save money on your mortgage.