No frills mortgages: why rate shouldn’t be your only consideration!
If you are seeing a rate advertised online that looks too-good-to-be-true chances are, it is. In the mortgage business there is something we call a no-frills mortgage which offers rates that are extremely competitive but force you to give up other benefits that may not be important to you until a few years down the road. These products often come with additional restrictions in the form of increased payout penalties, restrictive pre-payment privileges and or bona-fide sale clauses (which only let you out of the mortgage if you sell the property).
If a rate seems too-low-to-be-true it’s advised to ask some questions, such as:
- Is there an increased payout penalty if I pay this mortgage off sooner?
- Am I able to move my mortgage to another lender and break my term, if I want to?
- How is this mortgage registered on title (standard or collateral)?
- Can I make extra payments on this mortgage (referred to as pre-payment privileges)?
- Can I port this mortgage to another home? Can someone assume this mortgage from me?
Please contact me to have a meaningful interest rate conversation where we can compare regular rate offerings and no frill options so you can make an informed choice when it comes to your mortgage.