Getting the lowest mortgage rate sounds like it’s the be-all and end-all, but it’s not. Sure, your rate is an important piece of the puzzle — but it’s only one piece of a much larger puzzle.
If you focus on only getting the lowest rate, you are missing out on the bigger picture, the bigger plan, and the biggest goal which should be: How can I lower my overall cost of borrowing for the life of my mortgage?
As part of your home buying or refinancing process, we highly recommend considering the biggest goal: keeping your overall cost of borrowing low.
Homeowners often get excited and feel confident about making a mortgage choice based on a low rate, but may not having considered the ‘what if’ factor. It sounds great to have a super low rate for 15 months, but then what?
- What if interest rates rise?
- What if you can’t switch lenders without huge penalties?
- What if you are restricted from helpful options, like lump sum payments or payment frequency?
At Champion Mortgage, we can tell you that, over the last 10 years, over 70% of our clients have made a change to their mortgage before the end of the 5 year mark on their mortgage. That’s a lot of people who want to adjust their mortgage situation before they originally planned.
Homebuyers should always try and look at their life plans, as best they can, in order to know how best to select a mortgage. Planning ahead can result in your saving thousands of dollars down the road.
Key questions to consider include:
- Do you anticipate staying in your home for five years or longer?
- Generally, it is advised to plan to stay in your home for a duration of time (e.g. five years) before looking at selling or renting. Staying in your home will assist you in recovering your initial mortgage expenses and closing costs before you sell.
- Are you planning to start a family or grow your family?
- While no one can predict exactly when this will happen, it is wise to consider if the home you are looking at will fit your lifestyle and budget. If you foresee needing to refinance or sell within a short period of time, then you should discuss this with your broker.
- Do you want to pay off your mortgage quickly?
- If your goal is to be mortgage-free as quickly as possible, or in time for retirement, you will want to ensure that you have some flexibility in your mortgage payment structure and options.
- Are you covered if a member of your family faces a job loss or illness?
- Mortgage insurance, and other payment options, are worth discussing with your broker. Some lenders offer flexible payment options, including pausing a payment, and these are considerations worth reviewing with your broker.
The fact is, having a great rate isn’t enough to help you address life changes and goals. There are many elements that need to be taken into account and many options to be considered including:
How Champion helped: A real life story
Life happens, and we will work with you to make sure you have a plan with the options that work best for you, your lifestyle, and your future. The banks won’t do this — we will.
Leslie, a young business professional, wanted to buy a condo. She was convinced that nothing was going to change in her life for the next five years and that her condo purchase was going to be a long-term investment. Leslie had a low rate mortgage plan in mind and was ready to go. In order to provide her with a big picture plan, our expert team explained mortgage breakage penalties and advised her that, if she selected a mortgage with an interest rate 0.15% higher, she would be eligible for a much lower penalty, in case her life changed. Three years later, her life changed. She got engaged, sold her condo, and bought a house with her fiancé. Fortunately, following the advice of our experts, she was able to break her mortgage and pay a penalty that was $11,000 lower than it would have been with her original mortgage lender.
At Champion Mortgage, we will identify opportunities and proactively work for you to help you make the adjustments you need, so you can live the life you want.
Contact the team at Champion Mortgage and let us help you get more than just a great rate.