This is a great question! A lot of people, especially first time – of even second time home buyers – don’t necessarily know the answer to this question. The reality is that 70% of Canadians break their mortgage before their renewal date comes around. This is a significant number! Especially when you’re looking at paying a penalty if you want to break your mortgage before the renewal date.
In this article I’m going to talk about whether or not mortgage terms are in fact more important than rates. So keep reading if this is something you’ve ever wondered about.
Reasons you may need to end your mortgage early
Let’s be honest here and say that life happens. In this day and age, life moves so fast that it’s impossible to predict where we will be next year, let alone a few years from now. So chances are, you may need to get out of your mortgage early. Here are some reasons why:
Divorce or separation
No one believes that they will get divorced, but unfortunately, approximately 38% of couples divorce before their 30th anniversary. This means, people have a four in ten chance of getting a divorce. Due to this rate, you may need to get out of your mortgage early so you can purchase a home for yourself and move on with your life. You wouldn’t want to be forced to pay a penalty or even remain in the house until your mortgage renewal comes around right?
You get a random offer
This does happen. Someone could be driving by your house and they fall in love with it, so they have to have it. Maybe they even give you an amazing offer because they’re literally trying to convince you to move out of your house when you had no intention of selling. So, if you do get one of these once in a lifetime offers, wouldn’t you want to be able to take advantage of it?
Get a lower rate
The housing market is always changing. Therefore, you need to be able to change with it. It’s always a good thing to be able to break your mortgage early to take advantage of a lower rate.
Pay it off in full
What if the day comes that you have the ability to pay off your mortgage in full. This could be because you’ve been saving and have enough to do so, maybe you’re come into a lot of money through an inheritance. Whatever it may be, you always want the option to pay it off and walk around knowing you don’t have a mortgage and your home is officially paid for. Proper mortgage terms can make sure you have this option.
Mortgage terms are more important
Like I said before, life happens. And life rewards the people who are prepared for the unexpected. So, while there are a lot of things in your life you can’t control, making sure you have mortgage terms that will allow you some flexibility when unexpected things happen will help you avoid a lot of headache down the road.
The key is to avoid limiting yourself to what you can do with your life and your mortgage. Give yourself the flexibility to make changes and do something different. So, when you’re going through the process of buying a house, make sure you have those flexible mortgage terms because frankly, those terms may allow you to take advantage of lower rates down the line. That’s why mortgage terms are more important!