Mortgage Broker

Consumer Guide 2015 mbabc.ca | 45 a top-up, or charges higher rates and fees for the privilege, that bargain mortgage can start to look expensive after all. Another way to avoid a penalty is to take a term that coincides with a planned relocation or refi nance. That way, the mortgage comes due at approximately the correct time, or at least the penalty is lower because there is very little time left on the mortgage contract. Some jobs have a predictable transfer pattern that allows homeowners to plan ahead and anticipate the sale of their home. if you know you are likely to be relocating in two years, don't lock yourself into a fi ve-year mortgage contract. even if you plan to stay put for a long time, your circumstances may change unexpectedly. A large number of mortgages are paid out prior to the traditional fi ve-year term due to sale or refi nancing. A broker can shop for a lender who has lower penalties just in case this happens to you. Sometimes, a variable mortgage may even be the most attractive, as long as the borrower is prepared fi nancially and emotionally for fl uctuations in interest rates and payments. if you have a variable-rate mortgage, ask yourself what the likelihood would be of your wanting to lock in if rates were on their way up? is there a fee to convert? even more importantly, will you get a discounted rate upon lock-in, or will you need to negotiate a discount off the lender's posted rate at that time? When rates are on their way up, lenders are much less likely to want to negotiate. There are many wholesale lenders available only through mortgage brokers that only off er fully discounted rates. That way, if and when you want to convert to a fi xed rate from a variable rate, you automatically get the lender's best discounted rate on lock-in – and your mortgage broker makes sure that's written into your mortgage agreement up front. Some lenders off er a longer amortization, which is the time it would take to pay the mortgage back completely by making just the basic payment. For example, you can sometimes pay it off over 30 years instead of 25. While paying toward your mortgage for an extra fi ve years won't save you money on it, it will reduce your monthly payments. This can free up funds to pay down other, more expensive consumer debt instead and save you money that way. And you can always increase your payment later, or make lump-sum payments, to begin paying your mortgage off more quickly once you can aff ord it. Of course, the opposite approach is to take a mortgage with a much shorter amortization if you can aff ord it. Becoming mortgage-free 10 years sooner and eliminating that monthly payment will free up cash fl ow for travel or kids' education expenses later on. Many people today want to take advantage of the current low-interest-rate environment to pay their mortgage down more quickly so they will have less owing once rates eventually start to rise. And while it's commonly referred to as a "monthly payment," most people know that making their mortgage payment weekly or biweekly, instead of monthly, is an easy way to pay off their mortgage sooner. yes, it is a small step, but everything counts with your mortgage debt on the line. Another consideration is prepayment privileges. A mortgage that allows regular prepayments during the year is easier to pay off than one that requires you to save up and make a single, larger prepayment on the anniversary date. And if you have investments or an inheritance coming, fi nding a lender that allows larger lump-sum payments means you can start making a dent in that principal right away, instead of waiting to pay off fi ve or 10 per cent each year for the remainder of the term. The bottom line is yes, of course you want a good interest rate on your mortgage. All else being equal, the best rate will save you money. But many times all else is not equal, and borrowers may wish they had consulted a mortgage broker before signing up for that enticing interest rate that sounded too good to be true. P R O U D M E M BE R O F Invis.ca 1·866·854·6847 MortgageIntelligence.ca 1·866·304·8455 DON'T SLEEPWALK THROUGH YOUR MORTGAGE RENEWAL! It's a great time to save money.

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