Look Beyond the Mortgage Rate: What to Consider When Choosing a Mortgage Lender

The posted interest rate isn’t the only thing to consider when comparing mortgage lenders. Mortgage features may affect your ability to save money, pay your mortgage faster and manage your payments to suit your needs.

Here are a few things to look for before signing on the dotted line.

Mortgage pre-approval and interest rate guarantees

While a pre-approval may give you peace of mind, carefully read the fine print regarding rates, especially in a rising Canadian interest rate environment. Does your pre-approval also include a rate hold between 60 and 120 days? This may be in the form of an actual interest rate, or even a rate discount, as in “one-half per cent off the posted 3-year fixed interest rate for the next 60 days.”

When rates are going up, a guaranteed rate hold can be valuable and might save you big bucks in interest down the road.

Mortgage payment frequency

Payments don’t have to be made monthly. For instance, you can shave years off your mortgage by changing from monthly to bi-weekly payments made every other week.

Ask the mortgage lender if accelerated weekly, accelerated bi-weekly, or semi-monthly (twice a month) payments are available before committing to a mortgage.

Prepayment benefits

To reduce the amount of interest you’ll pay in the long run, mortgage prepayment privileges let you make extra payments towards the principal amount borrowed without paying a penalty. And flexible prepayment privileges may make it easier to pay your mortgage off faster. However, not all mortgage prepayment privileges are the same. Depending on your lender, you could be charged for paying more than your regular payments or be limited as to when, how much or how often you can prepay.

Find out what options are available to you before you sign your mortgage documents, and choose a lender that offers the flexibility you need.

The appraisal cost

Whether you’re applying for a new mortgage, a refinance, or you’re considering switching your current mortgage to a new lender, find out whether your lender covers the appraisal cost.

An appraisal is an independent report of the value of your home. An accredited appraiser carries it out at your lender’s request. A full appraisal usually requires the appraiser to visit the property to assess the size, structure, features, etc. They’re generally more expensive than desktop appraisals which compare features of a home against the real estate listing features of recently sold, comparable properties to get a value. Depending on the region and property type, appraisals may cost upwards of $250.

Creditor insurance protection for your mortgage

Since your mortgage is one of the biggest financial commitments you’ll ever make, you may want to consider protecting it. Creditor insurance can pay off or pay down your mortgage, or continue making your mortgage payments, in the event of your death, disability or critical illness. Ask your lender what creditor insurance protection options are available to you.

The quality of the advice you receive

Your mortgage isn’t your only financial obligation — it’s just one part of your financial picture and must be balanced with your other priorities and goals. When considering mortgage lenders, consider their reputation for quality advice and their ability to guide your complete financial future. After all, the right advice can help you manage your overall monthly cash flow and enable you to meet your other financial obligations with a little less stress.

Also, remember that life can change quickly. Your situation may evolve with shifts in your family or your career. As you evaluate mortgage lenders, consider how easy it is to contact and work with them if you need support throughout your mortgage term.

When you’re comparing mortgages, remember to consider more than just the lowest rate — these other features might be able to benefit you financially.

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