Choosing the right mortgage



A lot of people talk about the best mortgage solely in terms of the best rate. However, there are other considerations you should keep in mind when shopping for a mortgage.

First, how long is the term? A shorter term means you have the flexibility to easily get out of the mortgage if you need to sell, while a longer term will usually come with a lower rate but less freedom to leave. Related to that is whether the mortgage is open or closed. An open mortgage means it can be broken at any time, for refinance or sale; a closed mortgage will lead to a penalty. Some mortgage are even closed and locked, meaning that you actually cannot break them, even by paying a penalty. It is critical to check whether this is the case before you get into one of these mortgages.

Next, is it portable? Some mortgages can be moved to a new property if you sell; some cannot. If you think you might move before the end of the term, be sure to have portability options in your mortgage.

A great rate is of course important in a mortgage, but if it comes along with incredibly restrictive terms, it might not be the best mortgage for you in the end.