While many people are initially attracted to a mortgage rate that’s 10 bps or more below other rates in the market, many clients don’t realize that those low rates typically signal a no-frills product that comes with significant limitations on what the borrower can do within the contract terms.
No-frills mortgages are stripped-down to eliminate features that add costs.
Typically, no-frills products are designed to appeal to purchasers who are highly cost-sensitive, such as those who might not qualify at higher rates, and first-time buyers with limited opportunities to make prepayments.
When choosing a No-Frills mortgage product you typically give up the following:
- No frills is fully closed
- Prepayments limited in amount and number of times you may make prepayments
- No top-up options
- Quick closings
- No pre-approvals and longer-than-average approval times
- Limited choice of lender from which you can transfer without legal fees
While there is nothing wrong with choosing a no-frills product, just ensure you are aware of the limitations of no-frills and contact me to determine whether no-frills is, in fact, the right product for you.
Remember, not all mortgages are alike and ensuring the right fit with your needs is essential.
For more information don’t hesitate to contact me.