Mortgages With Low Interest Rate: All You Need To Know
Every home buyer looks for mortgages with a low interest rate. This is simply because the borrowing costs come down with such a mortgage and leave them in a better position financially. But you can't simply pick a mortgage rate just because it is low. There are many factors to consider before you sign on the dotted line. You need to first look at the various rates being offered by various lenders and which ones are what you'd like. Thereafter, you need to read the terms carefully and read between the lines and think if what is being offered suits your financial situation too. Of course, to get a lower mortgage rate you also need to meet certain criteria such as income, debt ratios, employment proof, good credit score etc.
Terms of low mortgage rates which you may need to navigate
Lower rate of interest usually comes with 'security' for the lender which is hidden in the agreement. It is best to have a mortgage broker in tow so you know what you are getting into. You may still want to look for the following:
If and when you decide to shift from one home to another you can also port your mortgage, but those lenders who offer you a mortgage at a considerably low rate, also have a clause against portability. So if you really do want to move house, you would have to pay a higher than usual penalty. What you must look for is a lender offering fair terms and rates.
Usually if your mortgage involves payments for five years or more, you want to refinance it before maturity. But lenders offering low rates often restrict the option of refinancing by putting in an explicit clause or asking for higher rates.
Pre-payment options are usually not there or struck out by those lenders who are offering you a mortgage at a low rate of interest. Since your interest is already low, you can't bring it down even further by making extra payments. This is done to protect the lender monetarily.
High penalty clauses:
If you are getting a low interest rate the lender may have something for him planned as well. Low rates of interest usually come with high penalty charges in case you break the mortgage early or decide to port as explained above. If anything about the agreement doesn't go as expected by the lender, they guard themselves with penalties. Usually banks are the kind of lenders with low rates and high penalties. So, be very sure what you are getting into.
When you are in the market to get a mortgage you should know what all these restrictions actually mean before you take up a mortgage. We encourage you to look around and see what suits you the best before making any decision. If you are looking for a mortgage and have any queries do reach out to LendX Financial in Brampton, Ontario.