To consolidate your debts or reduce your debt obligations, no matter what your requirement is, consider picking up the best refinancing options after going through the vital tips mentioned in this article. Learn from the top Mortgage Broker Ontario about essential mortgaging tips that can save you from paying extra. From loan penalties and prepayment issues to portability issues, choosing a suitable loan product requires considerable contemplation. Review some of the best suggestions given by top mortgage brokers in the country and help yourselves from falling into undesirable obligations.
Top tips to make smart mortgage refinances
Prepare yourself to make the biggest decisions like second mortgages, HELOC, investment purchases, and other refinance with this amazing set of tips.
Falling for lower interest rates might not be smart every time.
While it is true that loans with lower rates are the main criteria for any borrower, it is important to note that lower-rate mortgages may not be profitable every time. There is no guarantee to it. A lower rate is lucrative only and only if other factors like penalties, prepayment, and portability go easy on the borrower. And with a second mortgage or investment in tow, a lower interest rate is only one among several reasons that make a loan product feasible.
Ensure that your lender offers flexible prepayments
Prepayment flexibility is an important factor if you are likely to pay more than your obligations. However, prepayment clauses for several loan products are quite tricky. The lenders usually allow borrowers to pay a certain percent of the loan balance as a lump amount, known as prepayment. The amount is beyond your mortgage amount and does not invite any penalties. While some lenders allow the prepayment capacity to be 20 percent, many fix this amount to 10 percent, not allowing the borrowers to repay the loan quickly.
So if you wish to make your loan payments as fast as possible, consider borrowing from an institution that allows flexible prepayments.
Ignoring the mortgage penalties can be disastrous.
Penalties must be the last thing one would have in mind while considering a refinance. But experts warn of a harsh backlash if borrowers by any chance fail to pay on time. While most Canadians prefer a fixed-rate mortgage to variable rates, it is imperative to note that the fixed-rate mortgages from bigger banks invite higher penalties. And if by any chance you are likely to break your mortgage, choose the loan products that have lower penalties and higher rates.
Read fine prints thoroughly to understand the portability clauses
Do you intend to sell your property during your loan term? Then it is highly recommended to choose loans that have portability clauses. Portability ensures that your mortgages can be seamlessly transferred without incurring high penalties. Ensure that you read your portability clauses to avoid mistakes in the future.
Be mindful of collateral or standard charges.
If your mortgage clauses come with collateral or standard charge, then it indicates that you are allowed to HELOC in the future. But the renewals are deemed to be challenging in these cases. Hence, make sure that you sign up only if your lender offers the best rates for renewal.
Ensure your mortgage application is not in jeopardy
Ensure that you do not quit your job, take auto loans, or make enormous purchases on credit cards. These can put your mortgage applications in jeopardy as these affect your credit and income significantly.
Refinances can be quite tricky. If you are not accustomed to the loopholes, the chances are high that you end up committing the wrong loan products. Seek help from the best mortgage brokers in your area and save your time, money, and, most importantly, your credit scores.