MORTGAGE BENEFITS

Most lending institutions will allow you some or all of the following benefits.
See also the section on 'Pre-payment Options.'

BLENDED RATE MORTGAGE
EARLY RENEWAL
INTEREST RATE GUARANTEE
PORTABILITY
SKIP A PAYMENT

BLENDED RATE MORTGAGE

A blended rate mortgage may be used if you want (or need) to increase the amount of your present mortgage. This could happen if you want to use up some of the equity in your house, maybe for renovations, or to buy a weekend cottage. Perhaps you are moving and need a larger mortgage to be able to purchase the new house.

This option is worth considering if your present mortgage has a low interest rate, or if you wish to avoid the penalty.

With this option you get to keep the balance of your present mortgage interest rate, with only the new amount at today's mortgage rates. Because you are keeping the terms of your current mortgage contract, there is no penalty involved.

If your present mortgage rate is higher than those being offered at the present time, it could be worth paying off your present mortgage and obtaining a new, bigger mortgage at today's rates.

Please discuss the current policies of the different lending institutions with your mortgage broker, to help you decide whether or not this strategy will benefit you.

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EARLY RENEWAL

Most lending institutions will allow you to break your present mortgage contract and renew early. For example, if you had signed for a 5 year term but part way through (e.g. after 37 months) you decide that interest rates are the lowest ever and all indications are that they are going to start going up again, you may opt to renew early to get the low interest rates for a new term.

You will, however, pay the institution a penalty for breaking your present contract. In spite of the penalty, this could still save you money.
Please discuss the current policies of the different lending institutions with your mortgage broker.

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INTEREST RATE GUARANTEE

If you are looking for a mortgage to buy a house, or if your mortgage is coming up for renewal, this is a good time to talk to your mortgage broker!

Many lending institutions will guarantee you an interest rate as soon as they receive your application. Generally speaking, the guarantee means that if mortgage rates go up, you will get the old, lower rate.

The length of time of the rate guarantee varies by the lending institution and has nothing to do with the amount you are borrowing or how good your application is, it just depends on the policy of each lending institution. A mortgage broker will be able to give you this information.

If you are buying a house, or switching your mortgage (also called transferring), the guarantee can last from 60 to 120 days (2 to 4 months). The actual completion date of your house purchase (or renewal date) must fall within this time period for the rate guarantee to take effect. If your completion date (or renewal date) falls after the rate guarantee runs out, a different rate may apply, depending on whether rates have gone up or down.

Your interest rate is fixed on the day the money is advanced to either your lawyer, or you previous lender if switching.

If your mortgage is coming up for renewal, you should seriously consider switching your mortgage. Your current lender will probably give you a maximum of 30 days for a rate guarantee, and often at posted rates (no discount!). If your renewal date is Dec 1st, your rate can be guaranteed as early as Aug 1st.

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PORTABILITY

This is the ability to take your mortgage with you.... In reality what you get to take is the outstanding balance of your mortgage, at your present interest rate, for the time you have remaining.
As the mortgage will be for a new property, you have to pay legal fees for the transfer of property and the registration of the new mortgage contract.

If you need a bigger mortgage, the institution may let you use portability and then 'blend' on the extra amount needed. This gives you the mortgage amount you need at a rate that combines both the old and the new rates.

If you are considering moving houses, one of the main things you need to look at is your present mortgage contract.
Find out how much you owe, what interest rate you have and when the rate runs out.
Upon the sale of your house, your mortgage will have to be paid off. If you do not use portability you will have to pay a penalty for breaking your mortgage contract. If rates are low, this may be a better option for you.

Contact your mortgage broker! She or he will know the best interest rates available, and will tell you whether it would be cheaper to pay the penalty and get a new mortgage...or use portability to keep your old interest rate.

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SKIP A PAYMENT

Some lending institutions will allow you to skip one (or more) payment(s) per year. If possible, try not to use this benefit as the interest portion is added onto your balance owing and your mortgage will take longer to pay off.

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