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3 things your mortgage provider won’t tell you

Table of Contents
“You could be in for a big surprise” “I make more if you go fixed” “Mortgage insurance is a bad move”

Whether you got your mortgage from a bank, credit union or broker, the person you dealt with was not fully on your side. Why not? Because their profit margins, bonuses and sales commissions tend to be a little richer when you make the wrong choice.

This doesn’t mean mortgage people are evil, they’re just part of an industry that isn’t set up for your best interests. Here are three things you really need to know, but that your mortgage provider probably won’t tell you:


“You could be in for a big surprise”

Chances are, the main thing you focused on when selecting a mortgage was the interest rate. This is definitely very important, but not the only thing to look at. It’s a little-known fact that the mortgage business makes a lot of money not from interest charges, but from breakage fees.

A breakage fee is charged when you end your mortgage early, perhaps because you’ve moved or decided to refinance and consolidate other debts. Depending on your mortgage, this little timebomb can be in the tens of thousands of dollars, and most people don’t even know it’s there.


“I make more if you go fixed”

Fixed rate or variable rate? Historically, a variable rate mortgage has been much more likely to save you money, yet Canadians slightly seem to favour fixed rate mortgages. Perhaps we’re willing to pay more in exchange for a little more predictability.

Just beware that if your mortgage provider has encouraged you to go fixed, they may have their own reasons. Not only does the lender make more interest from you, but a salesperson will generally also make a bigger commission from you too.


“Mortgage insurance is a bad move”

After jumping through all the hoops of applying for and receiving a mortgage, one of the last steps is often to be asked if you’d like mortgage insurance. This insurance is meant to pay off your mortgage if you pass away. You may also be offered coverage that covers part or all of your mortgage if you become seriously ill.

Just say no. These types of insurance almost always offer worse coverage at a much higher price than what you could cheaply and easily buy on your own.


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