Traditional mortgages: more than meets the eye

Devil's in the details*

The myth that all mortgages are created equal is slowly unraveling.

In fact, when it comes to mortgages, one of the only things Canada's big banks can seemingly agree on is the interest rate. Everything else varies significantly between them.

Consumers, in turn, are slowly starting to figure out every bank has its own idiosyncrasies that may not be immediately apparent. TD Canada Trust, for example, has taken some heat from the media recently for its use of collateral mortgage charges in which the bank places a lien on the client's property for the home's full value rather than just the amount the client borrowed.

RBC, meanwhile, was the subject of media attention last May for taking previously advertised discounts and reapplying them to payout penalties – thus inflating the costs to borrowers who want to get out of their mortgages.

CIBC and BMO have also been the subject of media reports regarding their mortgages.
The unfortunate reality is every mortgage comes with different terms and options.

Understanding the 25 pages of legal that come with "super-low" interest rates is vitally important. Even though your bank may be a great place for your everyday banking, it may not be the best place to hold your mortgage.

Picking a lender with low payout penalties, less restrictions and higher pre-payment privileges can save you tens of thousands of dollars over the life of your mortgage. Something as simple as 20 per cent pre-payment privileges rather than 10 per cent can be the difference between paying off a mortgage in 10 or 20 years.

So how do you find out which lender is right for you?

The first option is to do your own research and hope you don't miss anything. The second is to consult with an Accredited Mortgage Professional, which could save you a significant amount of time and money, and prevent any surprises from popping up in the future.

Furthermore, anyone considering a variable-rate mortgage should certainly consult with a mortgage broker. Lock-in rates at non-bank lenders are almost always significantly lower than those at banks.

Nolan Matthias holds a bachelor of arts in Economics, is the co-founder of Mortgage360 and the author of The Mortgaged Millionaire. Call Nolan at 403-615-6132 with your questions or to set up an appointment with an Accredited Mortgage Professional (AMP).

* This content was produced by CREB®Now's advertising department, in consultation with Mortgage360. CREB®Now's editorial department was not involved in its creation.