This is probably one of the most important questions we get asked. Soooo….. what’s the answer?
That depends on your situation!
The majority of people will look at the rate rather than the product. Makes sense, that’s money out of your pocket every month. There is no denying that mortgage rate is important. However, it is also very important to understand the mortgage product you are getting. The fine print, penalty clauses and the general ins and outs of your specific product could have long term impact on your wallet and ability to maneuver the uncertainty of life. We all like to think that we know life’s path but the reality is that plans change, and life is very fluid. Your mortgage may not be, and you should know that. Some lenders will offer a “no frills” mortgage products that look attractive…initially. These mortgages are restrictive and generally do not allow (or severely restrict) pre-payment privileges, which are benefits built into your mortgage to allow you to pay it down faster without penalty.
Speaking of which, how your penalties are calculated, and when, is also a very important understanding to have when it comes to your mortgage. Some products have high penalties to break the mortgage and some only allow you to break the mortgage if you sell the house (so no refinancing!). Others have generic wording that sound alright on quick glance, but could cost you thousands if not compared to other lender’s ‘similar’ penalty calculations. Small differences in wording have drastic differences in potential costs to you!
Not to say these products don’t have a place in the marketplace. We are simply saying that products may work for some clients, but not for others. Specific differences between individual borrowing needs and situations drastically change from one person to the next. Our opinion is that some of these products generally are not in your best interest…but that’s our opinion. We strive to provide insight and education to allow you, the consumer, to make the choice that best suits your needs. It is important to understand the different rates and products before making a decision in regards what option to go with. A good mortgage broker will take you through all the options and provide you with solutions tailored to your immediate needs and future goals. In the end the decision is always yours. And that’s how it should be.