Assessing the best mortgage deal

Finding the best rate involves looking at the “extras” when selecting the best mortgage.

  • Feb. 16, 2013 7:00 a.m.

Mortgage clients constantly tell us: “I need the best mortgage rate. What rate do you offer?”

While mortgage brokers always seek to find the best rates, making that consideration also involves looking at the “extras” when selecting the best mortgage.

Those extras might include prepayment privileges, the amount you are allowed to prepay on your mortgage without penalty. Those privileges can vary from 10 to 20 per cent depending on the lender.

For example, if you have a mortgage of $300,000 the difference in a prepayment allowance can be huge.

Another option to consider is the ability for missed payment flexibility. You don’t want to see yourself fall into that situation but it’s still omforting to know the option is there.

The ability to port a mortgage is equally important. If you chose a mortgage that is portable, if you were to sell your home and purchase another prior to your term being fulfilled, you can port your mortgage to the new home without paying a penalty.

The lender will treat the new home as a new application  but your existing term will remain and no penalty will be levied.

If the mortgage on the new property is less than what your current mortgage balance is, you would pay a penalty on the reduction portion of the mortgage.

Another option to consider is if your mortgage is assumable. An assumable mortgage means the mortgage can be transferred to another borrower. It allows a purchaser to, upon qualification, take on your mortgage terms and payments as part of the sale of your home.

In this situation, there would be no interest penalty assessed to you.

Kelowna Capital News