Things to know
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The lending landscape has changed considerably in the last number of years as there are so many different products and rate guidelines to follow. Below is a list of some of these guidelines:
Brokers basically have access to the same products and it depends on how each broker chooses to advertise the rates. In the end it becomes customer service (ie economic updates, answering all your questions in a timely/detailed manner) and what I can offer you as my client in the value I provide during the mortgage process and after service.
While No-Frills mortgage products typically offer a lower – or more discounted – interest rate when compared with many other available products, the lower rate is really their only perk.
This type of product will only seem ideal for you if you have no plans to take advantage of benefits that will help you pay off your mortgage faster – such as pre-payment privileges including lump-sum payments.
Essentially, this product is only ideal for: first-time homebuyers who want fixed payments and have limited opportunities to make lump-sum payments during the first five years of their mortgage; and property investors who need a low fixed rate and are not concerned with making lump-sum payments.
No-Frills products typically won’t let you take your mortgage with you if you purchase another property before your mortgage term is up – ie, portability is not an option with this product. Portability is an important option that could save you money over the long term if the home of your dreams is within your reach before your mortgage term is up and rates have risen, which they have a tendency to do over a five-year period.
It’s understanding why these products may seem appealing. After all, during tougher economic times who has the extra cash to put down a huge lump-sum payment? And who needs a portable mortgage if they’re not planning on moving until the market picks up? But it’s important to remember that a lot can change over the course of five years – or whatever term you choose for your mortgage.
The thing is, you can still obtain great mortgage savings without giving up the perks of traditional mortgages. For starters, many lenders are willing to offer significant discounts if you opt for a 30-day “quick” close.
There are, however, other ways in which to earn your own discounts. For instance, by switching to weekly or bi-weekly mortgage payments, and by obtaining a variable-rate mortgage but increasing your payments to match those of the going five-year fixed rate.
No-Frills products represent a great example of why interest rates are not the only important factor to consider when deciding whether to opt for a particular mortgage product. Much like buying a car, you get what you pay for. If you don’t want a car with air conditioning, a stereo, a cup holder, and so on, then you can get the cheapest car going… but you may regret it later.
The lending landscape has changed considerably in the last number of years as there are so many different products and rate guidelines to follow. Below is a list of some of these guidelines:
- Certain lenders offer a lower rate if the mortgage is insured, in other words the down payment is less than 20% or there is less than 80% equity.
- Some lenders have promotional rates which are not applicable if the loan to value falls between 80.01% to 75%.
- Other lenders have promotional rates that apply only for purchases and not for renewals or refinances.
- Certain lenders offer lower rates for "live deals" if the completion date occurs within a certain period (ie 30, 60 days) of time from the date of submission.
- Some lenders premium the rate for investment properties.
- Other lenders offer lower rates for "no frills" mortgages.
- Certain lenders premium the rate for pre-approvals.
Brokers basically have access to the same products and it depends on how each broker chooses to advertise the rates. In the end it becomes customer service (ie economic updates, answering all your questions in a timely/detailed manner) and what I can offer you as my client in the value I provide during the mortgage process and after service.
While No-Frills mortgage products typically offer a lower – or more discounted – interest rate when compared with many other available products, the lower rate is really their only perk.
This type of product will only seem ideal for you if you have no plans to take advantage of benefits that will help you pay off your mortgage faster – such as pre-payment privileges including lump-sum payments.
Essentially, this product is only ideal for: first-time homebuyers who want fixed payments and have limited opportunities to make lump-sum payments during the first five years of their mortgage; and property investors who need a low fixed rate and are not concerned with making lump-sum payments.
No-Frills products typically won’t let you take your mortgage with you if you purchase another property before your mortgage term is up – ie, portability is not an option with this product. Portability is an important option that could save you money over the long term if the home of your dreams is within your reach before your mortgage term is up and rates have risen, which they have a tendency to do over a five-year period.
It’s understanding why these products may seem appealing. After all, during tougher economic times who has the extra cash to put down a huge lump-sum payment? And who needs a portable mortgage if they’re not planning on moving until the market picks up? But it’s important to remember that a lot can change over the course of five years – or whatever term you choose for your mortgage.
The thing is, you can still obtain great mortgage savings without giving up the perks of traditional mortgages. For starters, many lenders are willing to offer significant discounts if you opt for a 30-day “quick” close.
There are, however, other ways in which to earn your own discounts. For instance, by switching to weekly or bi-weekly mortgage payments, and by obtaining a variable-rate mortgage but increasing your payments to match those of the going five-year fixed rate.
No-Frills products represent a great example of why interest rates are not the only important factor to consider when deciding whether to opt for a particular mortgage product. Much like buying a car, you get what you pay for. If you don’t want a car with air conditioning, a stereo, a cup holder, and so on, then you can get the cheapest car going… but you may regret it later.