Are You Paired With the RIGHT Mortgage Product & Rate? Did you even think to ask?

That seems to be a question that not a lot of people ask. "Am I in the right mortgage product & rate?" Everyone is so caught up in getting the lowest rate possible, that it is a race to the bottom instead of stopping and looking at the full picture.


According to a survey done by CIBC and posted with The Toronto Star, Canadians do not think they will mortgage free till 57! Now is this due to people getting mortgages later in life; due to purchase price and down payments?? ... yes I believe partially this is the case. However I think the bigger problem is no long term thinking is being done. With the boom in 2007, it was the big push to "refinance your life" into your mortgage; so cars, boats, quads, credit cards, etc all build into your mortgage to give you a lower over all payment.... but does this help reduce mortgage debt? There were also those 40 year amortizations and mortgaging over 100% of your homes value. None of these things help anyone to pay off mortgage debt quicker. To add to it, for most people it has now freed up their available credit so they go out and purchase more "stuff". Or for a small example; if we continued on the 40 year amortization options, and you purchased your first home at 20 years old, max you would have it paid off is by 60 years old. But according to Global Toronto the average age is 27 years to purchase your first home. Current amortizations have dropped with the new rules, so with the 25 year amortization, that puts your age to 52 years old to be mortgage free.... but is anyone telling you, the client, there are ways to reduce this even further? Does your current mortgage product even allow you to do any of the potential options... or was the rate so low for your term that you can not do anything but paid as agreed? With the average house price in Alberta I believe to be around $400,000 and having to come up with the min 5% down, $20,000.... these are things that need to be asked and understood. You may not be able to do them right away, but who knows what the future holds... and options are always key with one of the largest purchases you will ever make!

Currently in our market... it is this huge push for lower and lower rates, kick started with the BMO 2.99% rate special. Do not get me wrong, lower interest rates are awesome! I get them for my clients all the time! However the other part I do is also find out what low rate is going to be the best option for my clients. Keeping in mind the current situation they are in and also keep in mind future situations that are not written yet. This is one reason I highly believe in Broker vs Banker, as I educate my clients on their mortgage options, all the time.


For example, is the Mortgage No Frills. Do you even know what No Frills means in your mortgage?

What it means is this "it offers lower rates, with little to no options and or flexibility". With something as large and long term as a mortgage, is this really your best option? Are you doing this just to purchase the largest priced house you can afford? what happens then when your term is up? or when the term is over and rates are higher? or you sit and do the math and figure you wont own the house till you are 60 or older! No Frills Mortgages do usually offer the best rate, in the race to the bottom... but think.. is that really what you want? is your banker or agent explaining this when you sign your papers to "take" the mortgage offered? Trust me when I tell you there are bells and whistles that you want.... that a few of my trust companies do offer to clients, along with lower mortgage rates! What you want really is the best of both worlds but also keep in mind that with the No Frills options, if it is 0.01% better than a Full Serviced mortgage... is the rate really worth it? I believe my clients should "get their cake and eat it too"... so you need to ask questions and be given options.

What do I mean by full serviced mortgages? Mortgages that offer pre payment plans/options & portability are two of the largest options. Pre payment options can be: lump sum payments to your mortgage between 10-20% of the original mortgage amount annually, once per term. As well as raising payments and/or doubling up payments...And portability... do you know if you will be in that house/condo for the full length of your term? Most Canadians do move at least once in their lifetime, usually more.........These are all things you want to think about when looking at mortgage products and options. You can lower your amortization substantially just with raising payments and doubling up when you can... and with raising payments, say on weekly payment options you will hardly notice the difference in your overall "monies" but annually you will see larger difference in your mortgage summaries. And speaking of payment options, do you have the option to do weekly payments or biweekly payments vs monthly? It makes a difference of your mortgage pay off timeline as well. Now for the lump sum payments, most Canadians will not use this feature, at least not to the max or every year of their mortgage... however with the option to do this, if you do chuck a few extra bucks to it annually, along with the raising payments; you will definitely cut the life of your mortgage by more than you realize. 



What I am trying to get across here, is make sure you have options. You may not think you need them, but who knows what the future holds. Ask questions. Lots of questions. You want to make sure you have someone in your corner, explaining all your options to you and getting you the best rate possible!  Paring you with the Right Mortgage Rate & Product! It is the only way to make the best decision for yourself and/or your family.





Working with a Licensed Mortgage Agent is a step in the right direction and in the end you will be paired with the Best Mortgage Rate and Product for YOU! Call/email me, I can help explain your options.

Ariana Leroux

Licensed Agent with The Mortgage Group AB

780.952.4087 mobile

www.arianaleroux.com

mortgages@arianaleroux.com