One of the big banks was offering a mortgage at a rate of 2.99% to entice borrowers away from the average market rate of roughly 3.29%. Whatʼs the catch? Every mortgage should be the same, right? WRONG!
Every mortgage can be DIFFERENT, but you wonʼt find out what is NOT good about the product until youʼre signed up and closed! Welcome to the world of The Stripper Mortgage!
The Stripper Mortgage is not an “exotic” mortgage for dancers. Rather, it is a mortgage whose key features have been “stripped” away so that the product can be priced better to attract buyers who focus solely on the rate!
The problem is that the features that are stripped away include being able to transport (port) your mortgage to a new home without a penalty, being able to have a buyer assume your mortgage without penalty (assumption), being able to flexibly pre-pay your mortgage throughout the year, and even being able to refinance your mortgage before the term is up! Some Stripper Mortgages even charge higher penalties than regular mortgage products with traditional features.
Do you think that The Stripper Mortgage with the best rate doesnʼt matter?
Why donʼt we ask the couple who got downsized at work and need to refinance their debts in order to free up cash flow? Their Stripper Mortgage doesnʼt allow for a refinance before the term is up. In fact, they can only get out of their mortgage if they sell their home and pay the penalty!
What about the recent widow who received a life insurance benefit from her husband's death? She has to pay her mortgage for another 3 years before The Stripper Mortgage Company will allow her to put extra money against her debt. This will cost her $10,000 in extra interest, all because The Stripper Mortgage offered “the best rate” two years earlier.
There is more than one way to entertain yourself, just as there is more than one way to estimate the implications of a mortgage product on your future. The key is finding a professional who will “strip” it all down for you; The Stripper Mortgage and a traditional one have features and benefits that can help or hinder your future, depending on how they are applied against your goals.
Thanks for reading!
Your London, Ontario Mortgage Brokers at Dominion Lending Centres Forest City Funding FSCO# 10671