Knowledge of context
“I often repeat this to my clients. Yes, the rate is important, but it should not be the only factor that people should focus on,” says Houssein Farhat, mortgage specialist at IG Asset Management. Experts expect that approximately 50% of the Canadian population will need to renew their mortgage by 2026. The predicted increase could reach 30% if the mortgagor does not put any strategies in place, which would lead to growth shock of the amount of each payment. “We are living in an inflationary period. The cost of the mortgage has increased significantly in the last two years, notes Houssein Farhat. Often online, we will see attractive interest rates in bold letters, but it is important to read the little star, because often, it is attached to very restrictive conditions. »
Expert help
“In the old days, people took the fixed five years every year. Now, it’s the opposite, we have a market with high rates, so people take two or three year agreements because they expect it to drop… We don’t want to embark on five years on 5.5% at the moment. » To navigate this world of contracts with variable durations and interest percentages, the help of a broker is essential. The possibility of obtaining personalized advice is also an important asset. “As a broker, we will put ourselves in “how to optimize the client’s financial situation” mode, to ensure, in the end, that the client will come out a winner from all of this. »
Banking relationships
“ Certain financial institutions, if the client has investments with them, will be inclined to negotiate lower than with a person who does not have a relationship with their bank,” raises the specialist. Some banks may also offer, at the same time, that a client transfers assets to them to benefit from this discretionary rate. Another good financial move: if your credit score is above 700 or 750, approximately, it is possible that certain institutions will offer, for example, a small discount of 0.5% additional to your mortgage loan negotiation, indicates Houssein Farhat .
Repayment Strategies
There are payment strategies spread out over one or two weeks rather than monthly. “Just by doing it like this, we can pay in 21 years and 1 month, rather than 25 years. This saves compound interest that would have piled up. Often, people are paid every two weeks, so it’s simple, the pay comes in and the mortgage goes out. » Incidentally, if you have the means or when you receive an annual bonus or a large tax refund, it is also possible to opt for early repayment: up to 15% of the initial amount of your loan without compensation, every year. “A lot of people or clients don’t know this, but these are strategies to pay off debt easier and cheaper. »