As I discussed in my previous blog posting, the interest
rate is an important aspect of a mortgage, but is not the only factor to
consider. There are other “features” within a mortgage that can be equally as
important. Here are a few:
· Payout penalty calculations: how the lender calculates what your penalty will be if you pay you pay out your mortgage out before the end of the term
· Pre-payment privileges: how much principle you can pay down annually without a penalty
· Portability: if you can “port” the mortgage to another home should you choose to move
· Assume-ability: if someone can “assume” the terms and balance of your mortgage
· Blend and refinance-able: if they will allow you to blend the rate of your mortgage with the current rate should you choose to refinance (generally with lower fees)
· Conditions of release: are there any special conditions in order to get out of the mortgage (an example would be BMO’s special rate in which you could only sell your home in an “arm’s length transaction i.e. no selling to relatives).
· Collateral loan charge: some lenders will register your mortgage as a collateral loan which essential makes it harder for you to switch lenders at renewal
· Co-signer release: some lenders will allow a co-signer to be released from the mortgage upon qualification of the other borrower. Alternatively, with some lenders you have to refinance in order to get their name off title (which means you would need 20% equity in your home)
Every lender has a unique set of terms within their mortgages. It is important to have a qualified mortgage professional explain all of the terms of the mortgage to you prior to entering into any long term commitment. Choosing the wrong lender could cost you down the road.
· Payout penalty calculations: how the lender calculates what your penalty will be if you pay you pay out your mortgage out before the end of the term
· Pre-payment privileges: how much principle you can pay down annually without a penalty
· Portability: if you can “port” the mortgage to another home should you choose to move
· Assume-ability: if someone can “assume” the terms and balance of your mortgage
· Blend and refinance-able: if they will allow you to blend the rate of your mortgage with the current rate should you choose to refinance (generally with lower fees)
· Conditions of release: are there any special conditions in order to get out of the mortgage (an example would be BMO’s special rate in which you could only sell your home in an “arm’s length transaction i.e. no selling to relatives).
· Collateral loan charge: some lenders will register your mortgage as a collateral loan which essential makes it harder for you to switch lenders at renewal
· Co-signer release: some lenders will allow a co-signer to be released from the mortgage upon qualification of the other borrower. Alternatively, with some lenders you have to refinance in order to get their name off title (which means you would need 20% equity in your home)
Every lender has a unique set of terms within their mortgages. It is important to have a qualified mortgage professional explain all of the terms of the mortgage to you prior to entering into any long term commitment. Choosing the wrong lender could cost you down the road.
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