One of the first things people ask when it comes to mortgages is: “What’s the lowest interest rate I can get?”. Naturally, we all love saving money, but sometimes there are additional factors that come into play when looking for the lowest price that impact our bottom line. For example, we wouldn’t drive an hour away just to save $1 on milk, and we wouldn’t buy shoes that were too big or small, no matter how inexpensive they were. We need things that best work for us first, and then we can begin the hunt for the lowest possible price.
This is exactly how it works with mortgages. The lowest rate may not be ideal for you if it’s not convenient or doesn’t come with options that you need. Sometimes the restrictions, terms or related fees attached to that super-low interest rate may end up causing more financial or administrative headaches than they were worth.
Let’s have a look at why finding the best mortgage is preferred over finding the lowest mortgage rate, and how and why it will make life easier in the long run:
How low can you go?
When you see a really low interest rate, be sure to read the fine print and find out more about any specifications that might negatively impact or restrict you: For example:
1.What is the mortgage term?
2. Is it fixed or open? Are you locked in to that rate for the specified length of time, such as 6 months or 1, 3 or 5 years? If so, does that work for you?
3. Are there fees and penalties? If you want to refinance, make bulk payments or pay it off early, what fees might you have to pay?
Depending on you and your current situation, you may need more breathing room when it comes to your mortgage, especially if you anticipate any upcoming changes such as with your job, income, relationships, family or even health concerns. If you foresee yourself moving in the near future for example, then that will impact the type of mortgage (or mortgage renewal) you secure.
Longer terms on a mortgage may have a slightly higher interest rate, but you have peace of mind knowing that if interest rates do climb during the term, you will be locked in at that rate until the term expires. If you pick a short-term, flexible mortgage, you can likely benefit from lower interest rates, but as soon as that terms ends, you will have to re-negotiate a new contract at the current rates. This may be good or bad news, depending on our fluctuating Canadian economy. It’s essential to consider what you are most comfortable with, what type of financial risks you can make, and what your future financial goals are when choosing a mortgage.
Making the move
Whether you are thinking of buying your first home, or perhaps your mortgage renewal is just around the corner, connect with me to talk about your best mortgage options. As an experienced, certified mortgage broker in Barrie, I’ll walk you through the process so you can make an informed decision that suits you. Who knows, maybe the lowest mortgage rate IS the best one, but we won’t know unless we get started! It’s my job to shop around to find the best rates for my clients; it’s what I do. Call today to book your appointment at 705-315-0516; I look forward to working with you.