Choosing the right mortgage product isn’t complicated if you know what your goals are and have a plan for the future.
Making the wrong decision can lead to you spending much more than you need to, not to mention added stress! Sometimes what looks like the best deal actually costs more in the long run, in hidden fees or inconvenient rules.
Don’t be tempted to chase the lowest advertised rate when shopping for a mortgage.
Here are 6 mortgage traps to avoid:
- A fully closed mortgage: You cannot change the terms of the mortgage as long as you own the property
- Add on insurance premiums:These effectively change the cost of the mortgage by adding insurance payments on top of the cost of the mortgage
- Low prepayment percentage:This will prevent you from paying down the mortgage faster and cost you more over time
- Not allowing easy access to equity:If you will need access to the equity you build up, this could be a deal breaker
- Teaser rates that start low but go up after a period of time:Some mortgage products start with a low rate, but only for the first year and then change to a rate higher than other lenders advertised rate, costing you more money in the long run
- Lack of flexibility, particularly for financing additional properties:If you are looking at home ownership as an investment, you may be thinking of purchasing another property down the road. Some mortgage products will restrict your access to financing your future purchases
It’s important to consider your overall strategy and future plans before looking for the right mortgage product.