Sunday 5 May 2013

Price or product?  That is the question.

Over the last number of years the focus on mortgages has been rate.  Who is offering the most competitive rate?  A lot of people have overlooked the products themselves in search of the best rate.  There is a lot more to packaging a mortgage than simply rate.

Some things to consider when discussing the best mortgage product for your particular situation are:

1. How long will you be staying in the property?

If you intend on moving in certain length of time, matching the term may be the best option for you.

2.  Do you intend on making extra payments on the mortgage? If so, how many extra    payments will you be making and how much extra will you be paying off per year?

If you are in a position to make extra payments on your mortgage, the prepayment options on your mortgage should be paramount to you.  Prepayment privileges change from lender to lender.  In addition to prepayment, the type of mortgage you choose will affect your ability to repay your mortgage faster.

3.  Are you comfortable with a fluctuating payment to potentially maximize interest rate savings?

A variable rate mortgage is sometimes beneficial in certain rate environments.  There is a risk that your payments could increase, but you may be able to save money compared to other fixed rate products.

4.  Are you looking to purchase additional properties in the future?  Will you require access to the equity in your home to do so?

If you are looking to purchase additional properties and you will need to access the equity in your home, a long-term fixed rate may present an obstacle.   The term and rate that you choose will affect the penalty to break or add to the mortgage.

These are only a few items to consider when structuring your mortgage.  There are many different terms and rates to choose from.  Matching the best product at the best rate is a job left to an experienced mortgage agent.

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