Saving on your mortgage starts includes finding a low rate, but it’s also important to consider the terms and conditions offered by your mortgage provider..
A rate hold allows you to lock in a mortgage rate for up to 30 to 120 days on average. This allows you to lock in a low rate so you can feel comfortable shopping for a new home. If you are renewing your mortgage on the other hand, it allows you to secure your mortgage rate 1-3 months before your actual renewal date.
Almost all mortgages come with lump sum and monthly prepayment options which help you pay down your mortgage more quickly with no penalty. Your lump sum allotment determines the percent of your mortgage balance you can pay of each year. A 25% lump sum prepayment option means you can pay off a quarter of your mortgage balance each year. Your monthly prepayment option on the other hand allows you to increase the size of your monthly mortgage payment. A 100% monthly prepayment option means you can double your mortgage payment each month. In 2011, according to the Canadian Association of Accredited Mortgage Professionals, 32% of Canadians took advantage of their prepayment options and paid off their mortgage more quickly.
When comparing mortgage rates you’ll want to decide if you want to work with a mortgage broker or a bank. A mortgage broker has access to rates and products offered by multiple lenders, while a bank offers their specific lending products. In 2011/2012, according to the Canadian Mortgage and Housing Corporation, 48% of first-time home buyers used a mortgage broker.