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3 Mortgage Tips For Save Money: That Actually Works

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Pro First Mortgage

According to Forbes, 28.8% of Canadian mortgages will need to be renewed in 2022. Whether you are refinancing your mortgage, or buying your first home, you have to consider certain factors to make sure you get the right mortgage.

This is why here are 3 mortgage tips that will save your money and time.

TIP #1: Ask if you have prepayment privileges

When interest rates rise, your mortgage payment will be more likely to be devoted to the interest rather than the principal. You can lower your mortgage payment faster by using prepayment privileges. 

  • What are prepayment privileges, exactly?

It is possible to pay off part of the mortgage principal early without incurring a penalty from your lender. You may be offered your ‘best rate’ by your lender at the expense of not being able to make any pre-payments during the term of your mortgage.  Ask your lender if your loan includes prepayment privileges, which will give you the flexibility to make extra payments. 

TIP #2: Check out the penalties for breaking your mortgage

You may need to sell your home before the end of the term for a variety of reasons, including a transfer to another school, changes in your marriage status, or any change in your financial status. 

  • What penalties would you face if you had to break your mortgage?

To break a variable-rate mortgage in Canada, you must usually pay 3 months' interest to your lender. If you have a fixed-rate mortgage, you may be liable to pay either three months of interest or the interest rate differential (IRD). The IRD is determined by current mortgage rates and your remaining mortgage balance.  Make sure you ask your lender if IRD is calculated after discounting or after posting the higher rate.

TIP #3: Considering making a down payment of less than 20% is a wise move

Think twice before you assume that making a 20% or more down payment on a mortgage guarantees you the most competitive rate. While it may come as a surprise, lenders actually offer the best rates to borrowers with high ratio mortgages (those with less than 20% down payment who need to purchase mortgage insurance). 

If you need a mortgage that works for your best interests, contact Profirst Mortgage Brokers!!! If you're earning a lot of money (or close to it) or coming up to a retirement age, we can help you find the mortgage that fits your budget, goals, and needs. 


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