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5 Common Mistakes Canadians Make With Their Mortgages
August 22, 2022 | Posted by: Marc Crossman
Given the slew of new mortgages taken out in 2020, there were bound to be slip-ups. Here are the mistakes Canadians most frequently make when securing a home loan.
Mistake 1: Not having your documents ready
One of your mortgage broker’s primary functions is to provide lenders with paperwork confirming your income, assets, source of down payment and overall reliability as a borrower. Without complete and accurate documentation, no reputable lender will be able to process your loan.
If you send your broker an incomplete documents package, the result is inevitable: Your mortgage application will be delayed as long as it takes for you to find the required materials, and your house shopping could be sidetracked for months.
Mistake 2: Blinded by the rate
The interest rate you’ll pay on your mortgage is a massive consideration, so comparing the rates lenders are offering is a good habit once you’ve slipped on your house-hunter hat.
However, many of the rock-bottom interest rates on offer from Canadian lenders can be hard to qualify for, come with limited features, or cost borrowers “a ton” of money if they break their terms.
Mistake 3: Not reading the fine print
Most borrowers don’t expect they’ll ever break their mortgages, but data collected by TD Bank shows that 7 in 10 homeowners move on from their properties earlier than they expect.
Borrowers hoping to refinance a mortgage they received from a private or specialty lender, often find that what they were attempting was impossible.
Some agreements include provisions that don’t allow borrowers to leave their mortgages until the property is sold to an unrelated third party.
Mistake 4: Not seeing the bigger picture
Understanding the relationship between your mortgage and your overall economic situation is a key step in the mortgage process.
When deciding which mortgage will fit their finances, borrowers often rely on a single calculation — can I make my payments every month? — without considering their overall financial picture.
Having a similar strategic chat with your broker can help illustrate how a mortgage will interact with your other debts and financial commitments over the life of your loan, which can prevent you from overextending yourself.
Mistake 5: Rushing in too quickly
With Canadian real estate still on fire and setting more records in 2021, you can be forgiven for feeling pressured to find and finance your first — or next — home. Properties vanish from the MLS, or multiple listing service, within days of being listed, so time really is of the essence.
But let’s be real: No matter how sizzling the market gets, rushing into a mortgage is often a terrible idea.
Your mortgage will dictate the strength of your personal finances for decades. The small details you skip over can result in you paying way more for your mortgage than you need to, or missing out on a property you have your eye on.
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Read full article here: https://financialpost.com/moneywise/5-common-mistakes-canadians-make-with-their-mortgages