When many are looking for a mortgage, often they have tunnel vision. They see the word “rate” and want to search for the lowest rate possible.
This is completely normal, and not uncommon!
We don’t blame you for searching for a low rate, that’s our goal too! However, there are other considerations to keep in mind when looking at a mortgage.
The most important one? Its features.
Shopping for a mortgage is very similar to shopping for a brand-new, shiny appliance. Essentially, you want to find the best price possible while ensuring that the new appliance has all of the features you need.
Similarly, so does your mortgage.
Finding the “best” mortgage involves securing the most competitive interest rate for the product that offers all of the features you require.
The features of your mortgage could provide you with the flexibility you need, when you need it most. In some cases, they may even end up saving you a lot of money too.
But where do you start?
Let’s take a look at some of the key mortgage features you should watch for, together!
1. Pre-Payment Privileges
Pre-payment privileges are a feature that many look for within a mortgage. It is essentially flexibility! It is the option to raise your monthly payments or make one large payment at certain times during the year. If you are someone that wants the freedom to pay off your mortgage on your own terms (bi-weekly, monthly, etc), you will want to look for a package with substantial prepayment rights.
2. Rate Hold
The term “quick close” sounds appealing to many, however, there is a lot of fine print that needs to be read before you decide to make the jump into one. Some of the lowest rates on the market tend to be “quick close” specials, which mean that they are only guaranteed for as little as 30 days from the time you start your application. If you are someone that requires more flexibility or more time, look for a mortgage with a 90 or 120-day hold.
3. Portability
Much like its name, the term portability refers to the idea that you can “port” or “move” your existing mortgage from one home to another. This is often a feature that many like to embark on, as should they need to sell and buy a new home during their mortgage term, they are able to do so. Porting the mortgage is a great option as it saves you the cost of paying a pre-payment penalty if you had to break your mortgage.
4. Secure Line of Credit
A Home Equity Line of Credit (HELOC) or secured line of credit, included in your mortgage is important to many as it gives you access to up to 65% of your home equity. This is also generally a much cheaper option than having an unsecured line of credit. As well, if you are looking to renovate your home in the future or embark on an additional investment opportunity, a secure line of credit feature will prove to be valuable for you.
5. Skip-A-Payment
This option is the epitome of flexibility, and offers you protection should an unforeseen life circumstance occur and you need to skip the regulated mortgage payment. This product varies by lender, however, it is common for you to be granted one skipped payment per calendar year.
6. Cash Back
Closing costs can cause a dent in your wallet, which is what cashback features help to minimize. This feature gives you back a percentage of the total mortgage amount as cash, which can then be used for various purposes. Many use this feature to help furnish their new home, upgrade a few appliances, cover legal fees and more. The amount you will receive is amortized into the mortgage, so make sure to be aware that you will be paying interest on that cash!
Get in Touch with Arise Mortgage
There are many mortgage features to consider when you are embarking on purchasing a home. Each mortgage is unique, and should complement your lifestyle accordingly.
Not sure which mortgage feature is best for you? Get in touch with our team today! We’d be more than happy to have a detailed discussion with you regarding your specific needs and how some of these features could benefit you.