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How important is the lowest mortgage rate to an investor’s success?

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guest | 18 Jul 2011, 03:22 PM Agree 0

This includes:•         Prepayment privileges•         Prepayment penalties•         Portability•         Cash back and cash-back clawbacks•         Value-add services and quality of mortgage advice provided by your lending advisor•         Low lender fees (if applicable)Your investment strategy and objectives should drive what you are looking for in a mortgage. Let’s assume you’re buying a cash-flowing investment property to build equity and to possibly re-finance at some point in the future. You call up your lending advisor and ask, “What’s your best five-year mortgage rate for a variable rate mortgage?” and you get the answer prime -90, beating an earlier quote you received by five basis points. You then decide to move forward based on this great rate. If you have not enquired about and paid attention to the prepayment privileges in this case, you may be dealing with a product with a deep discounted rate but with restrictions on re-financing including your ability to do so during the mortgage term. You could unintentionally limit your ability to effectively execute on your investment strategy or incur costs that could have been avoided in the first place. It is not all about the rate. It is about the right mortgage and working closely with a lending advisor who understands your financial situation, portfolio objectives and the types of investment strategies you are using to achieve those objectives
  • ronald | 17 Oct 2011, 02:05 AM Agree 0
    I agree the rates are important but other costs such as any fees or conditions can be equally important.
  • Irene | 27 Jan 2012, 07:47 PM Agree 0
    Also, the Loan to Value ratio may play an important when seeking a mortgage. The investment may make more sense at a higher LTV with a higher rate.
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