Mortgage Questions to Ask

The mortgage process can be daunting, and many put off the process as long as possible. The reality is that you have so many people who can help you out for free, but it is important to know the right questions to ask so you get the best deal!

Here are some key things to ask about before you sign a mortgage agreement:

Portability

Portability is a feature that allows you to transfer a mortgage to a new property in case you move. If you’re unsure about your future plans then you should ask some detailed questions about this opportunity. Some banks and lenders only offer you to end the current mortgage early and start a new one, which can get very confusing or cause you to get stuck with their services indefinitely if you have conflicting maturity dates.

Penalties

It’s important to know your lender’s penalties policies to ensure you don’t incur extra expenses. Each lender will have a distinct formula they use to calculate the penalty charged for breaking a mortgage agreement. All lenders are required to disclose their formula if asked so don’t be afraid to enquire about it! The key things you’ll want to ask about are the interest rate used and if the rate discounted or posted. These elements could save you a lot in the end.

Interest Rates

It’s important to remember that banks are a business, with investors and shareholders who expect a profit. One way they make money is by charging interest on the loans they provide to minimize risk as much as possible. Before you go talk to a mortgage advisor at your bank, it’s important to do some research so you know what the going interest rates are. If you go in prepared you will be able to recognize if the rate they offer you is indeed fair.

Prepayment Privileges

Most banks will offer you the ability to pre-pay your mortgage, but there are some key differences between lending institutions. Some make you wait until your annual anniversary while others allow you to begin at any time. They will also most likely have a minimum lump sum payment amount, which can be anywhere from $100 to $1000.

Collateral Mortgages

Banks often allow mortgagees to borrow more than the value of their homes in order to allow you to borrow funds in the future without a lawyer. While this could be a great opportunity it is important to note that when you enter this type of mortgage the bank now houses all of your debts. This means that if you sell your home and buy another you will probably have to pay the other debts before you are able to put money towards a down payment on the new home.

Look at all the benefits! If you are still feeling overwhelmed feel free to call us at AC Lending Group. We are happy to discuss any questions you may have and help you stress less about the mortgage process!