Ask an Expert: How to Ask the Right Questions When Choosing a Mortgage

 

At Avi Urban, we work with the experts to help you make the best decisions when buying your new townhome or apartment with us. One of these experts is Laura Parsons, Bank of Montreal Manger of Mortgage Specialists and Calgary Sun Columnist.

This week, Laura is back to talk mortgage rates, as she explains: “One of my favourite questions often asked by clients is ‘What is your best rate?’ Unfortunately, my response is not that simple and is dependent on what is best for them.”

So instead of talking rates, figure out the right mortgage for you by considering different options:

Think about prepayments. “This often depends on how long you are planning to live in your new home and whether you plan to change your term before it expires,” says Parsons. “For the prepayment charge, it could be three months interest or more.” So ask your advisor, if you take out another mortgage, can you reduce or eliminate the prepayment charge by blending the rate into a new mortgage?

What does a variable-rate mortgage mean? “Variable-rate mortgages are not for everyone, as the rate can fluctuate, meaning your payment will stay the same but the amount going to pay down your mortgage will change,” Parsons clarifies, “so this may impact the amount of time it takes for you to pay off your mortgage.”

Is a fixed mortgage a good option? Shares Parsons, “A fixed rate mortgage is better for people who do not like surprises, so for the duration of your mortgage, your payment will be the same and you will know how much you will pay off over the term.” It requires less maintenance and creates less stress, and you can still take advantage of pre-paying your mortgage.

When in doubt, discuss it! There are a lot of different questions and factors to consider. Take the time to discuss your situation with a mortgage specialist who can help you navigate the home buying process. You don’t want any surprises with the mortgage product you choose.

Have a question for Laura Parsons? Leave a comment below or email laura.parsons@bmo.com.