Choosing the right mortgage product isn’t complicated if you have goals and a plan for the future.
Making the wrong decision can lead to you spending much more than you need to, not to mention added stress! What looks like the best deal can sometimes cost more in the long run in hidden fees or inconvenient rules. Avoid common mortgage mistakes with our tips!
Don’t chase the lowest advertised rate when shopping for a mortgage.
Here are 6 mortgage mistakes to avoid:
- A fully-closed mortgage: You cannot change the terms of the mortgage as long as you own the property.
- Add-on insurance premiums: These increase your mortgage cost by adding on insurance payments.
- Low pre-payment percentage: This prevents you from paying down your mortgage faster and costs you more over time.
- Not allowing easy access to equity: If you need access to the equity you build up, this could be a deal-breaker.
- Teaser rates that start low but go up after a period of time: Some mortgage products start with a low rate, but only last for the first year. Then rates can go higher than other lenders’ advertised rates, costing you more money in the long run.
- Lack of flexibility, particularly for financing additional properties: Are you looking at homeownership as an investment? If so, you may be considering purchasing more property. Some mortgage products will restrict your access to financing your future purchases.
It’s important to consider your future plans before looking for the right mortgage.
This summary references an article by Dalia Barsoum, “6 Mortgage Traps to Avoid,” originally published in Canada Real Estate Wealth Magazine September/October 2016.