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Your offer was accepted! You’ve just bought a new house!!

So now is the time to shop for a mortgage, right? Wrong. The time to start shopping was when you decided to start searching for a new home. Understanding the financial implications and what you can actually afford BEFORE you make an offer just makes financial sense.

For argument’s sake, let’s just say that you are financially sound and understand your situation well enough to know what you can and cannot afford. You have now started “shopping” for your mortgage, but like so many other Canadians you think this means trying to find the cheapest rate possible. Cheaper is not necessarily better. In fact, when it comes to mortgages cheaper often costs people more in the end.

Many banks/lenders know that consumers are fixated on rate, so they sell you on a number, knowing that most clients will not bother to concern themselves with the mortgage terms or the “fine print.” These terms are often filled with restrictions, penalties and additional costs that can get really expensive if you should need to break a mortgage or refinance at a later date.

There are key aspects of mortgages that you should investigate… beyond what rate you are offered. Ask about flexibility in moving a mortgage from one property to another without penalty or how much of the mortgage can be paid off early without penalty.

Plus, “discount mortgages” often don’t have a bridge financing option (read my blog on bridge financing) and some banks are still offering teaser rates! (Not to name names… CIBC cough cough)

Life doesn’t always go according to plan and the up-front savings you might see from a “discount mortgage” may disappear entirely (and then some) in the long term.

At HW Advantage we have access to all these “cheap rates,” but take the time to share the pros and cons with our clients. We know the questions to ask, the terms that are important and ultimately can help you get the best mix of rate and security. Armed with this information, our clients can make an informed decision and select the mortgage that will suit them right now and into the future.

MY TIP: Don’t be fooled by a low rate because, if it seems too good to be true, it often is. Lenders are in the business of making money and you can be sure that if you are getting a good deal up front, they are banking on ways to recoup their losses down the road. Be wary, ask questions and be informed.

Thanks for reading.

Contact the HW Advantage today by filling out the form below or calling 1-905-541-6961

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