Nov. 05, 2014 | Nolan Matthias
Picking a mortgage that's right for youLow rates and product features
For decades, the process of selecting a mortgage has been the same: go to the bank, choose between a fixed or variable and don't ask any other questions.
Oh how things have changed. A mortgage is no longer just a mortgage.
There are many things to consider when it comes to finding financing. The first and foremost is whether the bank you love for your everyday needs is the one that is right for your mortgage needs. Ask what rates your bank will offer you without any haggling. You may find they're not as attractive as elsewhere. Next, and the most important step, is to consult a mortgage broker. Not to be confused with a mortgage specialist, who is employed by a bank, a broker is an independent third party who deals with multiple lenders.
A good broker will not focus on getting you a better rate, but a better mortgage. They will talk about the strengths and weaknesses of your bank in an objective manner. If they talk about only the weaknesses, then they are probably acting as more of a salesperson than an advisor.
Objectively finding a better mortgage is about finding that perfect combination of low rates and product features. The best mortgages have a low rate – usually within 0.20 per cent of the best rate available on the market – without any hidden fees, clauses or surprises.
Our observation is many consumers, upon fully understanding the difference between their banks' mortgages and those available from other institutions, tend to pick lenders they have previously had no relationship with.
The most common reasons are to avoid usual mortgage pitfalls such as collateral mortgages (which tie up home equity), clauses that prevent borrowers from paying off their mortgages and higher payout penalties.
Most consumers also tend to gravitate toward mortgage brokerages that provide a plan for their mortgage. For example, our goal is to help clients pay off their mortgage in seven to 15 years instead of 25.
In fact, we practise what we preach. We recently shortened our own personal mortgage from 30 years to 14 years and nine months in the first two years of the mortgage. To find out how you can do the same, give us a call.
Nolan Matthias holds a bachelor of arts in Economics, is the co-founder of Mortgage360 and the author of The Mortgaged Millionaire. Call Nolan at 403-615-6132 with your questions or to set up an appointment with an Accredited Mortgage Professional (AMP).