The Difference May Cost You A Lot!
The best rate for any given borrower may not at first glance be the lowest rates. A prime example of that is BMO’s rate special of 2.99% last year. The web was filled with promos for the special but no one was pointing out all the restrictions that the mortgage held.
Mortgage professional offer options form many lenders and a good mortgage agent will have sound knowledge to back up their advice. Some will criticize the old axiom, the lowest rate is not always the best rate” but it is often true.
When shopping for a mortgage you’ll want to know what the rate is, what the prepayment privileges allow, and is there a sale clause in the mortgage. What that means is, do you have to sell the house in order to make changes the mortgage?
It’s so important because technically it removes you ability to refinance you mortgage during the term. Something that lenders never talk about when offering the rock bottom rate.
The best advice you can get is telling your mortgage professional what you hope to do achieve during the term of your mortgage. Sure you want the best rate but do you want to prepay the mortgage, or is it your goal to increase the payments each year? By how much? How will the penalty be charged should you sell or refinance. There’s a huge difference between a 3 month interest penalty and Interest rate Differential, but you my also want to ask, “is the penalty calculated on the posted or the discounted rate”? Once again the end cost could far outweigh any savings on rate.
Be a wise consumer. Shop where there is maximum choice and look to a mortgage expert for advice on your personal situation. Mortgages unlike clothing are not One Size Fits All!