Buying a home is a huge milestone and also likely the largest financial investment you’ll make throughout your life. That’s why it’s important to look beyond just the interest rate you’ll be paying on your mortgage and find ways to save more of your hard-earned money throughout your homeownership journey.
Selecting the right mortgage with the ideal features to suit your unique needs will benefit you long term. Here are three important mortgage features to keep in mind when customizing your mortgage.
1. Prepayment Options. Having the ability to increase your regular mortgage payments or make lump-sum payments is a great way to help pay your mortgage principal down faster and save on interest. Even if you don’t think you’ll be making extra payments, remember that every bit helps. Your mortgage broker will be able to ensure your mortgage contains a prepayment clause. Ask about the amount you can prepay annually without facing penalties.
2. Mortgage Portability. It’s tough to predict the future and know exactly how long you’ll remain in your home. What happens if you decide to move from your current home to a new one during the lifecycle of your existing mortgage? You may want to transfer your mortgage to your new home. This option is referred to as having a portable mortgage. You need to, however, be aware of a few things in this situation, especially whether your existing mortgage rate is lower than what’s currently being offered in the marketplace. Your mortgage broker will be able to explain the ins and outs of this feature.
3. Early Payout Penalties. Life has a way of happening no matter how much we plan – including job loss, separation, illness and so on. That’s why it’s reassuring to know that if you must break your mortgage early to access home equity or even to sell, you’re not going to be shocked by early payout penalties. These can vary widely from lender to lender – ranging from a fairly manageable three months’ interest to an interest rate differential (IRD), which is often responsible for the large penalties you hear about in the media.
Have questions about your mortgage options and how to ensure you gain access to the features you need? Answers are a call or email away.