Don’t get raped with hidden fees on your mortgage
Article by Mortgage Rates Canada
Sometimes going out and getting the best mortgage rate isn’t all it’s cracked up to be. When you’re looking at the latest mortgage rates in canada, often times we think that a mortgage rate is the be all end all of lowering your payments. It’s important to note that many lenders will incorporate many hidden fees in order to push you up to paying a higher cost.
Often by disguising a number of fees into your mortgage, they can actually get you to pay the same amount of money. Let us examine this in simple terms. Let’s compare a 1 year 00 mortgage with 10% interest and no closing costs. That high interest might scare people away. How does that compare to a 1 year 00 mortgage with 4% interest and 0 closing costs.
It’s interesting to note that in the first example, you will actually pay back 00 on your 00 mortgage and in the second example, you will actually pay back 0 + 0 or 50 on your 00 mortgage. This means it’s more complicated than just looking at the latest canada rates interest percentages.
Now obviously this is a grossly oversimplified example but the lesson is important. Lenders know this and will often incorporate fees into your mortgage that make up for the discounted rate you are getting. So where do you look for it?
1. Closing Costs
The simplest way for a lender to make up for the money they’re losing on your mortgage is to simply charge higher closing costs. Don’t be afraid to work these into your mortgage calculations. Often people overlook this simple aspect assuming that most lenders have pretty standard closing costs. While it’s sometimes true, it’s not always accurate. Don’t overlook how much you may overpay for closing costs!
2. Prepayment Penalties
Many lenders will hike up their prepayment penalties for any number of reasons. It’s important to look at these figures especially if you’re on accelerated payback like a bi-weekly payment schedule. Don’t get suckered into replacing your lower interest payment with prepayment penalties.
3. Mortgage Insurance
That’s right. You can get dinged by CMHC as well. Be careful not to increase your LTV too high on a refinance if you don’t have to. Often you’ll pay for it in unforeseen mortgage insurance.
With a keen eye, you’ll be sure not let your lender overcharge you with hidden fees.
About the Author
canada rates is a leading Canadian mortgage specialist providing online shopping guides free to people looking for mortgages.