Valley First

Looking Beyond the Mortgage Rate

Home buyers advised to look beyond their mortgage rate to find best deal

With the return of the so called “mortgage wars” many potential home buyers are looking to take advantage of five-year fixed-rate mortgage specials hovering below the three per cent interest mark. Valley First experts advise, however, buyers should take note of more than just their interest rate.

“We’ve recently seen the return of a number of very aggressively priced mortgage products,” says Valley First’s Oliver branch manager Stacey Gagno. “For many people, these low rates seem like a tremendously attractive option and an easy choice. However, like everything in life, if the deal looks too good to be true, it probably is.”

As part of choosing the right mortgage, Gagno advises home buyers to look beyond the rate and consider other aspects of their mortgage such as allowable pre-payments, re-financing options and interest penalties.

“Low-rate fixed-term mortgages often come with many associated catches and clauses,” says Gagno. “The shine of a three per cent fixed rate quickly loses its gloss when you discover you can’t make pre-payments or are bound by heavy interest penalties for breaking the term of your mortgage. In many instances, you may well be better of f with a slightly higher rate on a mortgage that offers greater flexibility.”

On the surface, many low-rate fixed-term mortgages look too good to pass up, says Gagno. However, if you don’t take the time to understand the fine print, your deal could easily turn into a very costly mistake.

“Most people want to be mortgage free as soon as possible,” says Gagno. “Opting for a better interest rate in the short-term may actually end up costing you money over the life of your mortgage if you can’t make additional voluntary payments to drive down your principal faster, miss a payment or want to exit your term early. It’s imperative people understand all aspects of their mortgage.”


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