Is a low mortgage rate the most important thing?


another one which I particularly I not
gonna sugarcoat it I don’t like this product at all is you there there’s a
bona fide sale clause in this particular mortgage so what that means is you can’t
actually come out of this mortgage without selling your property Hi everyone it’s Lawrence Mak with Remax Realtron here again with Lucy Gagliardi, a mortgage agent with OZ capital thanks for joining me today Lucy thanks so much for having me Lawrence it’s great to be here hey everyone
today we’re talking about something like five year fixed mortgage where a lot of
people always ask hey can you find me a mortgage agent with the lowest rate
because you know probably save a lot of money on interest and that kind of thing
but that may not be the best trade-off so I just wanted to Lucy here to just
give more detail about why you shouldn’t necessarily just be looking for the
lowest rate Lucy so obviously everybody’s objective or everybody’s
goal is to have the lowest rate possible it’s my goal as well I want to make sure
yeah I really don’t want anybody to pay any unnecessary interest especially in a
mortgages a lot of money we’re spending every month and you know so so obviously
that’s a very important factor it should never never never be the most important
factor there are so many different products out there are so many different
mortgage products that you can that you can look at basically so while rate
really is important if you’re looking at the lowest lowest lowest rate you’re
looking at what’s called a no-frills product or a low rate basic product
what’s happening is there’s always a trade-off in most times with a
fixed-rate mortgage the trade-off can be you can’t come out of that particular
mortgage unless you’re paying either three at least
3% higher penalties or a 3% of the balance of the mortgage another one
which I particularly I’m not gonna sugarcoat it I don’t like this product
at all is there’s a bona fide sale clause in this particular mortgage
so what that means is you can’t actually come out of this mortgage without
selling your property well it is it is and oftentimes you don’t realize you
don’t think you’re gonna sell the property you and you know we’re in this
for five years everything is going to be hunky-dory over five years well you know
sometimes there’s unfortunately illness there’s job loss there’s separation or
divorce these are things that we you know obviously we don’t foresee but
statistically anybody that goes into or people that go into a five-year fixed
there’s over seventy percent of these particular clients that actually come
out of the mortgage within three and a half years big percentage exactly now
when you’re talking a little bit of a difference in the rate I’m talking about
point zero five or 0.1% so it’s really really important to understand what the
trade-off is what dollar value what does that actually mean to you to pay that
point zero five or 0.1% so generally at the end of the five years it really is
only a few thousand dollars and I to me a few thousand dollars I would rather
pay a few thousand dollars then no I can’t get out of this mortgage unless I
sell my property so if you doesn’t know it just for the flexibility of that’s
maybe getting out of it or at least if not as owners if you do get out of it
because it was really hard to predict what’s gonna happen in five years it
really is and you know we like has a wave throwing curveballs every once in a
while and if you don’t we haven’t had any curveballs that’s awesome but
you know I pretty much everybody I know has so but with that being said you know
there’s always a variable rate option which is very good as well so with
variable rate your your penalties are really only three months isn’t penalty
but again in a variable low-rate basic we’ll call it or lowest rate product
what you’ll want to look out for is again not having that bona fide sales clause where you you can’t get out of the mortgage unless you’re selling the property
one last thing I want to mention as well that this is porting mm-hm
so even if you’ve got this you know if there’s any type of extra restriction if
you want to call it that and but they tell you that your mortgage is still
portable what you’re gonna want to ask is are there any penalties or costs
associated reporting from again one property to another if you have a
standard five year fixed they’re generally might be a two hundred or two
hundred and fifty dollar application fee most lenders don’t even charge that some
do some don’t that’s neither here nor there but they’re again in a no frills
or low rate product sometimes they charge you a penalty just to transfer
from one property to one others so again your pay to come out of the mortgage
even though your stay with that particular financial institution I don’t
yeah yes again very onerous as it’s just hard to predict what’s in the future so
you just want the extra flexibility yeah so then if somebody is for example
looking for the lowest rate and they come to you what do you recommend that
they do say hey Lucy and what I want get is what you’re right you know what
should I do I guess more consultation try to figure
out what their actual situation that’s exactly what I do so I want to know
although what you like to do do you like to travel
do you have kids my kids dance, play hockey and my daughter rides horses
those are ridiculously at all do you want your child to go to
private school or do you just want to drive looking fancy cars Yeah right it’s
do you want to wear designer clothes these are all things like I don’t
believe anybody should be house poor I really don’t and so these are things
that I would definitely ask things about your lifestyle where do you see yourself
in five years how much equity do you have in the property because oftentimes
we don’t really realize we’ve got as much equity as we do what can use that
equity for investment we can purchase additional properties you know there’s
so much that you can do with equity that I wouldn’t want to see somebody for a
few thousand dollars over the five years restricted to something that they can’t
get out of or it’s gonna cost some extra money to get out a lot of great
information so I just want to quickly summarize them so if you are looking for
a lowest rate around I mean there’s nothing wrong with that of course you
can save some interest but just make sure that you understand all the
fine print and all the paper work about there just in terms of the
penalties that will take for you to port the mortgage out or to get
out of the mortgage and that kind of thing because it may not always be about
the lowest rate sometimes just about life flexibility because you never know
what life will throw at you. That’s exactly it all right well until that if you need anything about mortgages, just talk with Lucy

Michael Martin

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