Beyond the Rate: A World of Possibilities
Let’s face it – who doesn’t dream of a mortgage-free life? If that’s your goal, prepayment privileges should be your new best friend. Prepayments allow you to chip away at your mortgage balance with additional payments, but here’s the kicker – not all mortgages are created equal.
In the world of closed mortgages, where most Canadians dwell, there are often restrictions on your prepayment superpowers. The extent of these privileges can also vary from lender to lender.
One might let you make lump-sum payments anytime throughout the year, while another may restrict you to an annual contribution.
So, why does this matter?
Well, imagine this: you secure your best available interest rate but are limited in making extra payments. Over time, those missed opportunities can end up costing you dearly. Why? Because each lump sum or double payment immediately eliminates the interest you have to pay on that money FOREVER.
Therefore, it’s essential to ask about prepayment options upfront to best strategize your financial future.