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When working with mortgage brokers, it’s important to know these three key points.
Knowing what a mortgage broker is, knowing the difference between a mortgage broker and a traditional bank, and the language you need to know to make yourself a pro in making the proper decision for you.
First, a mortgage broker is an individual that is able to access a wide range of lending institutions with no cost to the client.
Secondly, the difference between a mortage broker and a traditional bank is both the wider range of lending institutions, but also a wider range of interest rates, sometimes even being able to access better rates at the same institutions.
Thirdly, some important language to know when getting a mortgage is the difference between a variable rate and a fixed rate, where a variable rate is flexible and can start as low as 1.85%, normally with a lesser interest penalty of 3 months which is different from an interest differential penalty of what a 5 year fixed can be set at. A variable rate can change over the course of 5 years but it all depends on the bank of Canada deciding if they want to increase or decrease the prime lending rate.
A fixed rate can be set at as low as 2.59% for the entire 5 year term. The fixed rate mortgage also has a penalty structure of a 3 month interest penalty or an interest differential penalty which can be a big difference between a $1,500 penalty or a $10,000 penalty.
Remember, when it comes to picking a mortgage, shop around, pick a plan that best works for you, and understand the terms and conditions of the mortgage.