5 Tips On Getting The Perfect Mortgage For You
November 23rd, 2009
1. Predict Your Future
The type of mortgage you receive should compliment your life and your lifestyle. For example, if you are 28 years old, just married, and planning on buying a “starter condo” with your wife, you should be able to predict your future. Chances are that you will be having a child in 2-3 years and you will need to move. If this is the case, you need to have a mortgage that you can transfer or break when you sell. If you are in this situation and you received a 10-year fixed mortgage, you might have to pay thousands of dollars in fees when you sell your condo.
Other considerations include the stability of your job, and whether you like to save or spend your money. For example, if you are a saver, your mortgage should allow for an increase in payments or frequent “lump-sum” mortgage payments opportunities.
2. Shop around
According to RateSupermarket.ca, The Canadian Association of Accredited Mortgage Professionals (CAAMP) the national association for mortgage brokers, did a study and found that “when obtaining their mortgages, Canadians received an average of 1.94 mortgage quotes. Only 3% received more than 4 quotes”. This shows that buyers are not doing enough “shopping around”. A $300,000 mortgage amortized at 25 years could end up costing the buyer more than $200,000 in interest over the life of the mortgage. Even getting a 1% reduction in your mortgage rate can save you thousands of dollars (enough for a new car!). So make sure to shop around and get the lowest rate!
3. Use a Mortgage Broker
Why not? Mortgage brokers do not cost buyers any money. Mortgage brokers only make money off the mortgage that they get you. If you want to see the true value in using a mortgage broker, then try this: First you can go find the best mortgage that you can receive, and before you sign, call a mortgage broker and see if they can find a better rate. You have nothing to lose and only money to save. You could also ask your mortgage broker to explain the fine print…
4. Read The Fine Print
Some of the key points that are hidden in the fine print would include: extra fees for lump-sum payments, extra fees for breaking the mortgage early (ie if you sell), fees if you want to transfer your mortgage to your next home or not (if you move). Take the time to read your mortgage document and take the time to ask questions or negotiate. If you try to negotiate with your bank, they will most likely tell you “that’s the way it is” and if you don’t know better, then you might accept it. But if you had a mortgage broker, they might know that “you can get them to remove that” (that’s another reason why a mortgage broker is a good idea).
5. Know All The Costs
The average mortgage will earn the bank more than $200,000 in interest and a few thousand dollars more in fees. Before you accept that mortgage, you should take the time to outline all the costs to make sure you understand all the costs. You should be know :
- CMHC costs (plus interest)
- Interest costs
- Set up fees
- Amortization costs (compare the interest costs on 25, 30, 35 year mortgages)
Most people are ecstatic that they can even receive a mortgage. They are so happy to be moving into their new home, that they could care less about the costs. It’s usually after you move in and you look at all the costs of your mortgage that you begin to have “mortgage remorse”. That “remorse” gets even worse when you talk to your friends and find out they received a mortgage with better terms and at a lower rate than you. A new car costs $25,000 and most people spend a few days researching their new car. If this is the case, then how much time should you spend researching your new mortgage, which cost you $200,000?
ByTheOwner.com





