Just one-in-three (33%) Canadian home buyers with a mortgage have read their entire mortgage agreement according to the 2015 Scotiabank Mortgage Poll. Of those who have read at least some of their mortgage agreement, only 27% understood all of the details in the agreement.
“Buying a home is both exhilarating and stressful, which is why a meeting with a financial advisor to understand all of the terms and conditions of a mortgage agreement will ensure customers get the mortgage that is right for them,” says Scotiabank’s David Stafford, Managing Director of Real Estate Secured Lending. “Flexible features like prepayment privileges, bi-weekly payments and the ability to port your mortgage can save customers thousands in interest and fees over the long term.”
Stafford offers five tips to help Canadians get into the mortgage that is tailored to their home financing needs:
1. Know how much home you can afford. Working with a financial advisor to develop an overall plan ensures you’re making a fully informed decision about your home purchase, and eliminates some of the anxiety.
2. Understand your options. Just as important as rate are mortgage features and flexibility. Many home buyers focus on the rate and payment schedule, but it’s crucial they also consider other important options, such as prepayment schedules.
3. Is the mortgage portable? Some home buyers, like first-timers, have plans to make a change after two or three years, maybe upsizing, downsizing, or moving. Being able to move the mortgage with you to your next home is an essential point of discussion.
4. Get pre-approved before you make that offer. While it’s helpful to have a rough idea of what you might qualify for in a mortgage, we encourage home buyers to get a pre-approval before starting their home search, so they’re aware of what the parameters are around affordability.
5. Build your team. It starts with your financial advisor, so you know what you can afford and how to structure the mortgage agreement. You’ll also want a really solid real estate agent, someone that understands your needs followed by a lawyer or notary to close that deal. You’ll also need a home inspector and an insurance broker to make sure that you’re getting insurance on the property.
About the polling data
Scotiabank calculations are based on an online survey conducted by Nielsen for Scotiabank among 1,008 Nielsen panel members who either own a home or plan to purchase in the next 2 years. Data was collected from January 28 through February 6, 2015.