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Tracy Irwin, Mortgage Broker, The Mortgage Centre
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The Devil Is In the Fine Print
Mortgages sometimes have costly and irritating restrictions that you won't know about unless you read the fine print or ask your mortgage broker! Watch for these:
- Interest rate differential penalties that are based on bond yield calculation (this is a very costly method of calculating the interest rate differential penalty)
- Inability to transfer your mortgage to your new home unless the purchase and sale happen on the same day (which can be difficult to arrange)
- A poor conversion rate guarantee (especially important when converting your variable rate mortgage to a fixed rate option)
- No refinancing opportunities within the 1st year (life isn't always predictable - who needs restrictions)
- Restrictions on breaking your mortgage before the term is up
- Restrictions on breaking your mortgage for the first 3 years and reinvestment fees on top of mortgage penalties
- No ability to break your "open" homeowners equity line of credit
- No lump-sum, annual payment increases or prepayments permitted
Last but not least, watch closely for restrictions that apply to cut-rate mortgages. Generally, the lower the rate, the more restrictions!
Let your accredited mortgage broker provide you with the freedom and peace of mind you deserve from your mortgage!
- Excerpts from article published by Canadian Mortgage Trends