Understanding how your mortgage can affect your long term finances is an important part of being a home owner. Things like taxes, interest rates, pre-payment options, and other hidden costs tied to home ownership can have a direct, and lasting, impact on your ability to achieve your financial goals.
Canadians have enjoyed years of low interest rates and this ability to borrow funds cheaply has spurred larger purchases. Combine that with an unpredictable stock market and a relatively consist growth in property values and we have changed the way we think about investing. Cash savings have reduced as we put more money into property ownership and paying down the debt we have been building. Due to tightened mortgage lending guidelines indicators tell us that the property market in Canada has levelled out and in some areas may even dip. That doesn't mean that home ownership is a bad investment, but it does mean that the days of making a fast buck might be gone for a while.
For some reason Canadians like to compare interest rates, almost as if the lower the rate the higher the prestige. We don't spend time over the hedge comparing bank statements, so why do we feel compelled to talk about rate so much? The truth is this need to compete for the lowest rate might be 'fashionable' but it could cost you big money if the product is not aligned with your goals.
Talking to a mortgage professional about more than just the best interest rate gives you the information, and tools, you need to better plan your future. Things like pre-payment options, penalty calculations, and even payment schedules can save you tens of thousands of dollars over the life of your mortgage. Do you plan on keeping the property for the long term, or is it a shorter term investment?
Understanding that you have options and how to best exercise them should be an important part of your decision making process. If you only focus on getting the lowest possible rate, you might find that those savings were short lived when it comes time to renew or if you need to refinance early.
Talk to a CENTUM Professional today and build a plan that aligns with your needs and helps you to achieve your goals both short and long terms. It has to be more that just a mortgage, it has to be a total home ownership solution.