An email I received this morning from a lender sparked this one. They’re calling this a ‘great promotion’. I choose to differ…
2.95% for a five year mortgage! Sounds good and will most likely get the phone ringing. However, I would run, fast, away from this extremely restrictive product.
Here’s the fine print which pretty much restricts you from doing anything. It will also be registered as a collateral charge which is not to your benefit.
Amortization – Maximum 25 yrs
Maximum LTV – 75%
Owner occupied only
Closed –
No prepayment before the end of the term
No doubling up or accelerated payment
No lump sum payment
No portability or assumability
No blend and extend
These terms are extremely important to have. Paying an extra .10-.15% for an full featured mortgage is well worth it. On a $250k mortgage it’s a mere $17/m.
In my ten years and hundreds of mortgages done, I have never ever allowed anyone to obtain such a restrictive mortgage to chase a lower rate. I’ve seen too many people obtain one of these style of mortgages and come in to major issues later on. This ends up costing them MUCH more than paying the little more to have all the features.