Date Posted: October 5, 2018
Around half of Canadian mortgages will be up for renewal in the next 2 years. Here are some terms that may help save thousands.
Mortgage rates have increased since these mortgages have been in place so it’s best to budget for a higher payment.
Pre-payment privileges are always important to understand. This allows you to put additional money down on your mortgage which applies to the principal and helps you pay off the mortgage sooner. Most lenders offer 15%-20% increase to payments and the same percentage of the original mortgage amount can be paid off as a lump-sum. These privileges are available each year of the term.
Portability is also an option, which means that if you sell and purchase a new house you can take the mortgage to the new property, within a specific number of days, and avoid breaking the mortgage and thus incurring a penalty.
Penalties with the big banks can be excessive depending on when the mortgage is broken. They use the posted rates to calculate these penalties which are always higher.
Banks are known to push the life/ disability/ critical illness insurances on borrowers. These are not required by banks or lenders but the industry is required to offer it to you. You’ll want to consult with your insurance broker to understand what coverage you have, or want, in place.