Finding the mortgage that best suits your needs

Broker says lowest rate isn’t always the best option

Paul Macara with Invis-Beyer Mortgage Services says the lowest rate isn’t always the most important factor when determining the mortgage that best fits your needs.

Paul Macara with Invis-Beyer Mortgage Services says the lowest rate isn’t always the most important factor when determining the mortgage that best fits your needs.

As interest rates remain in historically low territory there are a number of attractive options for those looking to enter the housing market or renew their mortgage.

With an increasing number of low-rate, no-frills mortgages promotions, one local advisor is suggesting that those shopping for a mortgage keep in mind that cheapest isn’t always the best.

Paul Macara, a mortgage broker with Invis-Beyer Mortgage Services, said although shoppers will take many things into consideration before making a purchase, many believe the lowest rate is the only factor in choosing a mortgage.

“Who really knows what life might be like a few years down the road?” asked Macara. “The lack of flexibility associated with a no-frills mortgage could end up causing you some major headaches and costing you more in the long run.”

He said those shopping for a mortgage need to take a number of factors into consideration, pointing to refinancing penalties, fixed of variable rates, term length, pre-payment options, payment flexibility, restrictions, fees and portability.

“An amazing cut-rate mortgage could have you locked into a very rigid contract filled with financial trip lines that could work against you down the road. That’s why it’s important to check the fine print,” said Macara.

While in general Macara likes the security that comes with a five-year rate, he said a variable rate has its benefits, “as long as you’re willing to live with the risk.” He said a variable rate would not be the best option for someone on a fixed income.

He said most homeowners should expect to pay a penalty if they want to break their mortgage to get a better rate or for a complete refinance. Many in five-year fixed mortgages will look to break the mortgage during the third year for debt consolidation or to accommodate changing circumstances.

“Some no-frills mortgages come with larger than your typical IRD [interest rate differential] penalties. It is important to understand how your penalty will be calculated before signing.”

Macara said knowing whether it’s worth it to break a mortgage is simply a matter of doing the math, a calculation he’s more than happy to provide for his clients.

He also suggests looking over the prepayment options that will allow you to chip away at the principal to reduce the overall cost.

“I always encourage my clients to try to take advantage of prepayments each year as these go directly to the principal,” said the Oak Bay-raised Macara.

He said a maximum 25-year amortization can take away flexibility that may be needed later, with many homeowners choosing a 30-year amortization but setting their payments to the higher amortization period. This gives them the option to reduce their payments should an emergency arise or situations change.

“For first-time buyers too, a 25-year amortization means higher payments than a 30-year amortization and could limit their entry into the market,” he said.

Marcara suggests speaking with a mortgage broker or other financial advisor before jumping at the lowest rate you can find.

“We’ll always help you find the right combination of low rate with the options you need to achieve your goals for homeownership and the financial future you want.”

 

editor@oakbaynews.com

 

 

Just Posted

(Black Press Media file photo)
COVID-19 exposure closes Oak Bay pub, restaurant

Penny Farthing, Vis-a-Vis expected to reopen Wednesday after deep clean

Victoria police officers used less-lethal weapons to arrest a woman Sunday night after she allegedly attacked a man with a hammer. (Black Press Media file photo)
Victoria police use less-lethal weapons on woman following hammer attack

Greater Victoria Emergency Response Team called to barricade situation

Greater Victoria School District (SD61) Saturday announced a COVID-19 exposure at Oak Bay High School. (Black Press Media File).
Oak Bay High School subject of COVID-19 exposure

Greater Victoria School District (SD61) said possible exposure happened June 9-10

Victoria police are looking for Delmer Esau who was last seen in Esquimalt June 1. (Photo courtesy of VicPD)
MISSING: Search continues for man last seen in Esquimalt

Delmer Esau, 35, hasn’t been seen since June 1

According to Statistics Canada, the unemployment rate in Greater Victoria stood at 6.3 per cent in May 2021, nearly unchanged from April’s rate of 6.2 per cent. (Black Press Media File)
Unemployment rate in Greater Victoria stagnates at 6.3 per cent in May

Latest figures reflect conditions before lifting of public health measures

Canadian Prime Minister Justin Trudeau participates in a plenary session at the G7 Summit in Carbis Bay, England on Friday June 11, 2021. THE CANADIAN PRESS/Adrian Wyld
Canada donating 13M surplus COVID-19 vaccine doses to poor countries

Trudeau says the government will pay for 87 million shots to be distributed to poor countries

Citizenship Minister Marco Mendicino holds a press conference in Ottawa on Thursday, Nov. 12, 2020. The federal government is announcing that Indigenous people can now apply to reclaim their names on passports and other government documents. THE CANADIAN PRESS/Sean Kilpatrick
Indigenous people can now reclaim traditional names on their passports and other ID

Announcement applies to all individuals of First Nations, Inuit and Métis background

Harvesting hay in the Fraser Valley. (Tom Fletcher/Black Press)
COVID-19: B.C. waives farm income requirement for a second year

Property owners don’t need minimum income for 2022 taxes

Cruise ship passengers arrive at Juneau, Alaska in 2018. Cruise lines have begun booking passengers for trips from Seattle to Alaska as early as this July, bypassing B.C. ports that are not allowed to have visitors until March 2022 under a Canadian COVID-19 restrictions. (Michael Penn/Juneau Empire)
B.C. doesn’t depend on U.S. law to attract cruise ships, Horgan says

Provinces to get update next week on Canada’s border closure

This undated photo provided by Girl Scouts of New Mexico Trails shows a scout donating cookies to firefighters in Rio Rancho, New Mexico, as part of the Hometown Heroes program. As the coronavirus pandemic wore into the spring selling season, many Girl Scout troops nixed their traditional cookie booths for safety reasons. That resulted in millions of boxes of unsold cookies. (Girl Scouts of New Mexico Trails via AP)
Thinner Mints: Girl Scouts have millions of unsold cookies

Since majority of cookies are sold in-person, pandemic made the shortfall expected

In this artist’s sketch, Nathaniel Veltman makes a video court appearance in London, Ont., on June 10, 2021 as Justice of the Peace Robert Seneshen (top left) and lawyer Alayna Jay look on. THE CANADIAN PRESS/Alexandra Newbould
Terror charges laid against London attack suspect

Crown says Nathaniel Veltman’s four counts of first-degree murder constitute an act of terrorism

Premier John Horgan speaks as provincial health officer Dr. Bonnie Henry, right, and health minister Adrian Dix look on during a press conference to update on the province's fall pandemic preparedness plan during a press conference from the press theatre at Legislature in Victoria, Wednesday, Sept. 9, 2020. THE CANADIAN PRESS/Chad Hipolito
B.C. officials to provide details on Step 2 of COVID reopening plan Monday

Step 2 could allow for larger gatherings and a resumption of recreational travel

Indigenous Services Minister Marc Miller is seen during a news conference, Wednesday May 19, 2021 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Indigenous child-welfare battle heads to court despite calls for Ottawa to drop cases

Feds are poised to argue against two Canadian Human Rights Tribunal rulings

The Great Ogopogo Bathtub Race has been held in Summerland as a fundraising event. Do you know which Canadian city introduced this sport? (Black Press file photo)
QUIZ: A summer’s day at the water

How much do you know about boats, lakes and water?

Most Read