Here are seven tips so that you can save the most money on your mortgage:
1. Compare rates online to secure the lowest possible interest rate. This can save you many thousands of dollars!
2. In general variable rate mortgages have performed better than fixed rate mortgages over time. If you are willing to take the risk of rates rising in the future, the potential savings can add up by choosing a variable rate mortgage.
3. Always be sure to check the penalty clause in the mortgage, as breaking the mortgage could potentially result in a hefty penalty that would need to be paid when the property sells. This is particularly pertinent if the possibility exists of moving sooner rather than later. To reduce the penalty you could try to time your move/home sale with the date of your mortgage renewal.
4. Only refinance a mortgage when it makes sense after doing the math. This happens when the interest rate on the consumer debt is significantly higher than the mortgage rate and there is a plan to pay it off within the next 3-5 years.
5. Instead of putting a lot of savings into a savings account where interest rates are low and you pay taxes, pay off your mortgage quicker. Your savings will likely be bigger and the interest paid on a mortgage (principal residence) is not deductible for taxes.
6. Don’t buy mortgage insurance, it’s a rip-off for many reasons. If you want insurance, get a separate policy in the amount of your mortgage. It will likely be both cheaper and have better terms.
7. Save a big enough down payments (preferably 20%) before getting a mortgage so you don’t have to pay for mandatory CMHC insurance.
Finally, to reinforce how important the first point is: Double check rates with one or more brokers to make sure there aren’t any better deals to be had.
If you have questions about financing your new home, please call me, I can help answer your questions.