Mortgage Features
Every lending institution is different, and each will have their own
customizable mortgage options. When you're hunting for a lender and a
home, see how the following features could be beneficial to you.
Prepayment
This can be a great option if you receive regular bonuses or if your income
fluctuates throughout the year. With a pre-payment privilege, you have the
right to make payments toward the principal portion of your mortgage over and
above the monthly payments. A mortgage with a pre-payment option is closed.
An open mortgage means you can pay the entire principal sum without notice
of bonus.
Portability
If you still have time remaining on that fantastic loan you negotiated,
portability is one option you'll want to discuss with your lender. Quite
simply, it means transferring the balance of your current mortgage at the
existing rates and with the existing terms and conditions to your new home.
Assumability
Let's say that the vendor has negotiated a dynamite mortgage. With an assumable
mortgage you, the purchaser, simply assume the obligations of the mortgage. This
is a wonderful feature especially if the terms are more favorable than the existing
market conditions would allow. Remember, when it is time for you to sell, you may
still be liable for any mortgage you allow the buyer to assume. This means if the
buyer stops making payments, you could be accountable for the payments. Be sure to
have the subsequent buyer approved for the assumption of the payments, thereby
avoiding this potential land mine.
Expandability
If you need additional funds down the road, will your mortgage terms allow you
to increase the principal amount? Usually, your new rate will be a blended amount
of the initial mortgage rate and the prevailing rates. It's a great option to
discuss with your lender if you foresee large expenses in your future like
renovation or education costs.
