When Higher Rates Can be Better.

When it comes to getting a mortgage, there is a common misperception that a low rate is the most important factor. However, while your rate does matter for your mortgage, it is not the only component to consider.

If you’re looking to get a mortgage, these are some other important factors that you should look at beyond simply the interest rate:

Term: The length of time that the options and interest rate you choose are in effect. A shorter term (5 years) allows you to make changes to your mortgage sooner, without penalties.

Amortization: The length of time you agree to take to pay off your mortgage (usually 25 years). This determines how the interest is amortized over time.

Payment Schedule: How often you make your mortgage payments. It can be weekly, every two weeks or once a month and will affect your monthly cashflow differently depending on your choice.

Portability: An option that lets you transfer or switch your mortgage to another home with little or no penalty when you sell your existing home. Mortgage loan insurance can also be transferred to the new home.

Pre-Payment Options: The ability to make extra payments, increase your payments or pay off your mortgage early without incurring a penalty.

Penalty Calculations: Where variable rates typically charge three-months interest, a fixed rate mortgage uses an Interest Rate Differential (IRD) calculation. This can add up quite quickly! In fact, in some cases, penalties for breaking a fixed mortgage can sometimes be two or three times higher than that of a variable-rate.

Variable versus Fixed: For fixed-rate mortgages, the interest rate does not fluctuate over time. For variable-rate mortgages the interest rate fluctuates with market rates, which can be great when rates drop but not so great when rates are rising.

Open versus Closed: An open mortgage is similar to pre-payment options, allowing you to pay off your mortgage at any time with no penalties. A closed mortgage, on the other hand, offers limited to no options to pay off your interest in full despite often having lower interest rates.

When considering your mortgage, the above components all have a part to play in your overall mortgage as well as your homeownership experience.

It is easy to think that a low-interest rate is good enough, sign on the dotted line… but you may be overlooking important options such as portability, which allows you to switch your mortgage to another property should you choose to move. Or pre-payment options, which give you the choice to make additional payments to your mortgage. Without looking deeper at your mortgage, you may find yourself being forced to pay penalties in the future because you wanted to make a payment or a change to your mortgage structure. In some cases, agreeing to a higher rate to have more options and flexibility is better in the long run than the savings received from a lower rate.

Before agreeing to any mortgage, lets sit and talk about your future goals and any potential concerns you have to ensure that you get the best mortgage product for YOU.

Written by my DLC Marketing Team

MAKING THE BIG MOVE

Making the move cross country is never an easy undertaking for anyone. I know, because I did it back in March of 2011 when I moved from Kitchener, ON to Banff AB. I packed up my two bedroom apt.  and drove cross country in my Jeep Liberty .  

I wasn’t driving alone tho, my then long distance boyfriend of 7 years, now husband, flew in from Banff to help with the move. 

Before the decision could ever be final, I needed to get permission from my two boys (17 & 13 at the time).  When I sat down with them and asked how they felt about me moving out of province, they were excited for me, and just wanted me to be happy. Insert tears here. 

From there it was pretty quick.  I had to let their father know my plans, and the rest of my family and friends.

Contacted my local U-Haul and reserved my trailer, and had them add a trailer hitch to the Jeep to tow it. (which I thought was reasonably priced)  

Spent days calling and talking to utility companies, insurance, credit card companies, banks, business partners ( had a small aromatherapy store in Fort Erie with a young RMT and her husband).  Just as important was giving notice to my landlord, who always treated me great.  You never want to burn any bridges. No one has a crystal ball to know the future.

I gathered boxes from the grocery stores and bought a bundle for U-Haul.  Packed up everything, (So I thought lol) leaving just what I needed. When It came time to put it all into the trailer I was still packing things up! To the chagrin of my family that showed up to help. Ooops

On a side note, try to make sure you recruit more help then you need, cause as well intended as people are to help you, moving anyone is not on the top ten,” best fun one can have” list

So here we are all packed up and hugs and tears are over and we are on the road.  I ended up driving most of the way, including thru Manitoba. Specifically just before Brendon Manitoba.  We end up running into a snow storm. Well wasn’t there black ice on the highway. I wasn’t 100% sure, with the trucks and other vehicles speeding past me. Soon I found out what hitting black ice was like.  I felt the trailer start to sway behind me. The steering wheel starts to feel  loose in my hands. I instinctively take my foot off the gas, and tap the brakes. WRONG, you know what comes next. Yes, the trailer swings around and smashes into the back of the Jeep. Loudly taking out the rear passenger window and caving in the back door.

Now we are turned around facing oncoming traffic. Here we are out of the vehicle and looking at the damage.  When we think, maybe we should get back in, and keep going down the road. Freezing and driving much slower than before, I start seeing the big trucks and vehicles that went speeding by us, now in the ditch! GREAT!

 Just before we come into Brendon, I feel the trailer start to go again, this time I give more gas and bring it back out.  For some strange reason, in the back of my head I hear my dad telling me you have to give GAS, to get out of a slip.  Thanks dad! (RIP)  Saved more damage being done to the Jeep or even us!

Finally get to Brendon and grab some garbage bags and tape to cover the window and head back out.  3592.5 km, and 4 days later we finally pull into Banff where his buddies are waiting to off load the trailer into the apt. Nerves a little fried, tired, hungry and very appreciative to be alive. Time, for a well deserved beer. 

#madeitalive #crosscanadamove #diditmyself #brokersforlife #cochranemortgagebroker