There are several reasons why consumers sign up for five year mortgage terms even though statistically the average mortgage only lasts 3 years. Most of us don’t plan to leave our lending institution early and break our mortgage contract however, life happens. Perhaps you leave your job, change locations, run into financial trouble, get divorced, have a baby and need more space or just plain want to move, or many other possible reasons.
Many consumers opt to use the big banks for their mortgage even though they will have to pay substantially more at the time of early discharge. More often than not, I suspect, the consumer doesn’t know how the policies work or think that they will ever be faced with the situation. Even porting your mortgage (moving it to another house) can be costly.
How do you avoid this? Many lenders that are accessed through mortgage brokers calculate their penalties in a more fair fashion. This makes them more competitive with the big banks and provides better customer service. These lenders are reputable government regulated companies that accumulate funds from investors who are also reputable and reliable.
Consumers should make informed choices when deciding on where they should obtain their mortgage including what it will cost them to get out early if necessary.
Click here for and article in the Globe and Mail for further info.