Mitigation starts before choosing a mortgage

Last week, CBC's Go Public reported on an Edmonton couple that were shocked to learn their bank wanted a $17,000 payout penalty to end their mortgage early.

Just days earlier, a B.C. mortgage broker posted a client's $26,000 payout statement from another bank on Facebook that went viral.

And in July, a B.C. Supreme Court judge certified a class-action lawsuit against yet another financial institution for unfair payout penalty practices.

Plenty of options available to buyers
When buying a home, the first thing to consider is the down payment.

Most people know they need at least five per cent of the purchase price as a minimum  requirement, and 20 per cent to avoid Canadian Mortgage and Housing Corp. (CMHC) mortgage insurance. However, many people do not realize there are more places to come up with a down payment than just your savings. Here are a few of the most common:

Savings
The first and most common source of a down payment is a person or a couple's savings. First you save, then you buy the house – pretty straightforward.

'Don't pay off someone else's mortgage'

Many of us remember our parents telling us it is better to own a home than rent one at some point in time – "don't pay off someone else's mortgage," they'd say.

They could not have been more correct.

So why are many people still choosing to rent when owning a property can be so financially rewarding?

How to get the best rate

One of the most costly mistakes when renewing a mortgage is to not looking at all the options. Both blindly signing a renewal statement, or not signing one at all, and allowing the mortgage to renew automatically, can be costly.

Here is what you need to know when it comes time to sign on the dotted line, again:

Start looking 13 months before your mortgage renewal date

Depending on your mortgage lender, it may be beneficial to renew or switch lenders more than a year in advance. A low rate for a one- or two-year term can, in many cases, be more financially beneficial than riding out the last year of a current mortgage at a higher rate, even if you have to pay a penalty.

REALTOR® guided transactions offering more than just peace of mind

By Nolan Matthias

While no bank has come out and said it, their actions speak louder than words. Banks prefer to lend on properties where the transaction is handled by a REALTOR®.

As mortgage professionals, we have noticed increased scrutiny on private sales is becoming the norm – and for good reason.