Getting into a mortgage plan that is not compatible to your finances can create stress situation, it can get even more costly to get out of this troublesome. Therefore it is important to consider all the aspects before selecting a mortgage plan. Make sure what you are getting into and stay away from these following traps.

  1. Charges and Fees

Consider all the options before taking the final decision in this respect. Fee structure for different mortgage plans come with different benefits to their customers some offer reduced interest rate, free credit cards and fee free increases.  If you want to avail these benefits you are required to pay the charges. Also you can compare fee options of different mortgage plans by calculating your mortgage amount and terms. Key Facts Sheets are available for a lot of loans and will generate a personalized comparison rate. This will help put it all in perspective.

Some loans do not charge application fee but they have charges for loan setup process which is almost the same thing. Therefore make sure what you are getting into before choosing any of these options.

If you are borrowing more than 80% of the equity of home most lenders will charge mortgage insurance. This can add thousands of additional dollars to your budget and you may end up paying a higher rate due to savings in mortgage insurance.

If you are going to receive paper statements make sure you won’t be get charged for it.  Lenders often try to convince people to prefer paper statements over electronic statements so they usually charge additional amount for this service.

  1. Pre-Approvals

If you are going to a formal pre-approval from your lender make sure that you fully understand what is it about and whether it has been fully reviewed or not. Lenders do not give much importance to pre-approvals as the property has yet to be found. A formal pre approval that can be relied on needs to have credit checks completed, payslips and employment history examined and savings statements reviewed as part of the process. If your pre-approval is fully assessed you can easily make offer on a property with the confidence that your finances are secure.

  1. Fixed Rates

Getting into a fixed rate mortgage brings a sense of security and reliability. Although this type of mortgage comes with some terms and conditions that you should keep in mind. Always keep these guidelines in mind to work out with your mortgage in best way possible.

One of the terms of fixed rate mortgage is that it does not allow you to pay extra amount, you have to pay one fixed amount for a certain period of time. This issue can be resolved by dividing your loan into fixed and variable portion but this decision should be taken with care.

If the interest rate on variable rate mortgage is getting lower than fixed rate mortgage then it is better for you to switch from fixed rate mortgage to variable rate mortgage. When rates were falling a few years ago many people who had fixed scrambled to break their fixed rate and revert to variable. Marriage breakdown, relocating to another city for work or just receiving an amazing offer on your property may all mean that you want to sell the property. Fixing your rate may mean that you have to consider cost implications of breaking the fixed term.

Fixing your mortgage means if some other mortgage deals comes out which you may find attractive it’ll become costly for you get out of fixed rate. In that case lenders make sure that they offer you an attractive deal to make you stay with them throughout the mortgage term.

It can be risky for you if the lender is offering a good fixed rate deal but not so competitive variable terms.   Once you decide to choose variable rate over fixed rate you may consider the option of refinance to get a better deal. But if you have borrowed above 80% of the equity of home refinancing is not a suitable option for you. On the other hand, if you have borrowed less than 80% of the equity of property you still need to factor in the cost of refinancing which will include discharge fees, setup costs for the new loan and government charges.

  1. Interest Rate

When looking for mortgage the focal point of some people is purely the interest rate. Although along with other aspects interest rate also plays an important role but you should not make it center of attention. Clients should also focus on services like customer care, internet banking and specialists. If it is your first time with mortgage you are definitely going to need the help of a professional mortgage expertise. The more you know about mortgage, the more it will become easy for you to choose a suitable mortgage plan. Similarly customer care is a very important service which should not be neglected. Check out the reviews and testimonials of previous clients to get information about it. Internet banking is also an important service for you to understand. You should know what types of transactions are likely to make. Ask all sorts of question to get a clear idea of everything that you’ll be doing to deal with.

Doing a little research about home loan will save you a lot of money and frustrations over the period of time. Avon Financial can help you with your home loan process. If you like to discuss your options you can contact us today at 905-216-5563.

 

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