Often times, borrowers are fixated on the mortgage rate because it’s the one aspect of their home financing they know to ask about. It’s important to look beyond mere rates into the bigger picture surrounding what’s significant when it comes to your specific mortgage needs.

The difference between 3.39% and 3.45%, for instance, works out to an additional $3.15 in your monthly payment per $100,000 of your mortgage. Over the course of a five-year term, this culminates into just $285 per $100,000.

It’s understandable that at first glance these products seem appealing. After all, not everyone feels they have the extra cash to put down a huge lump-sum payment and who needs a portable mortgage if you’re not planning on moving any time soon? But it’s important to remember that a lot can change over the course of the mortgage term – or whatever term you choose for your mortgage. You could get transferred, find a bigger house, have babies, change careers, etc.

The biggest problem with looking at rate alone is that you are ignoring other potential costs: like how payout penalties are calculated on the low rate product; the portability options; the lack of or limited pre-payment options (i.e. lump sump payments and increasing payments each year); is it compounded semi-annually or monthly (i.e. what is the effective annual rate); and how the lender registers the mortgage on title (conventional charge vs. collateral charge). Not considering all of the features that go behind the rate can be short sited and potentially increase your total borrowing cost.   

You can still obtain great mortgage savings  and earn your own discounts without giving up the perks of a traditional mortgage.  For instance, by switching to weekly or bi-weekly mortgage payments, or by increasing your payment amount, you’ll be ahead of the typical discount of a low rate product before you know it – and you won’t have to give up on options.

Banks don’t give anything away for free – they are there to make money. That’s why it’s essential to discuss the full details surrounding the small print behind the low rates. It’s also important to take into account your longer-term goals and ensure your mortgage meets your unique needs now and into the future.

I’ll ask the questions that will allow you to make an informed decision. I’m here to help!