Top 10 mortgage tips

1. It’s not just about the lowest interest rate. Your interest rate is really just one piece of the puzzle, and may not be the most important part. Its important to consider other factors like pre-payment privileges, penalties, and portability.

2. Not all pre-payment privileges are created equal. Some lenders are more generous than others. Some lenders will let you prepay 20% of your initial mortgage balance every year and others will only let you prepay 10% once a year on your anniversary date. For people who are serious about paying off their mortgage as soon as possible this can make a huge difference.

3. Consider the penalty for breaking your mortgage term. Most people choose a five-year fixed rate mortgage for security, but ignoring penalties could cost you dearly if life doesn’t go as planned. If you think theres any chance you could break your mortgage, talk to your broker about other term options. 

4. Read the fine print on portability. If you think theres a change you will sell over your term, choose a mortgage product that is portable. Some portability clauses are more generous than others. Don’t just assume you can port your mortgage. 

5. Know whether its a Standard or Collateral charge. A collateral charge means you may be able to take out a home equity line of credit later on, however it makes it tougher to move your mortgage when it comes up for renewal. Because of that, your lender is less likely to offer you its best mortgage rates upon renewal.

6. Don’t forget to budget for closing costs. Most lenders like to see that you have 1.5% of the purchase price saved for closing costs. Closing costs include: legal fees, moving expenses, utility hook-ups, inspection fees, and so on.

7. Don’t put your mortgage application in jeopardy. Examples of things that can hurt your mortgage application and even cause it to be declined are: changing jobs in the middle of the application, taking on new debt, or missing payments.

8. Shop around with a mortgage broker. Do your due diligence. A broker can shop the market for various mortgage products on your behalf, saving you time and money, along with protecting your credit score. You are more likely to find a better mortgage product by using the services of a broker. 

9. Consider monoline lenders. Monoline lenders only deal mortgage lending. The majority of the time, monoline lenders have the lowest interest rates on the market, the most attractive pre-payment privileges, and the lowest pre-payment penalties.

10. Shop around at your renewal date. You could be leaving thousands of dollars in savings on the table if you automatically sign on the dotted line.