Why You Need to Read the Fine Print: Mortgages


By Don R. Campbell

It is spring and mortgage competition is beginning to heat up again. However, be forewarned, many people are making wrong, and potentially financially disastrous decisions in the types of mortgages they choose. In fact, when I ask people what the terms of their mortgage are, in most cases all they can tell me is the interest rate, the term and the amortization period.  That’s it, and that is VERY scary!

We are finding that the majority have lost touch with exactly what they are agreeing to when they sign a mortgage, and even worse, most have never read the full document they are signing, and when their lives change, the financial costs can be both surprising and devastating. Time to wake up to the reality that not all mortgages are created equal, and not all financial institutions are equal. 

One of the biggest surprises that homeowners and investors discover, when their lives change and they need to make a mortgage change, is that there are often massive penalties many mortgages have hidden in their term.  So massive, in fact that some consumers cannot afford to make strategic changes even in the case of illness, job relocation or death (example: http://www.cbc.ca/1.2790108).  



As someone who has been dealing with mortgages for years, I have discovered that the fine print of the mortgage (the pages that nobody seems to read before signing) is the most critical part of the document. These are considered the terms of the mortgage – the rules under which you are going to be governed during the length of the mortgage. Many are obvious and simple, while others are confusing and almost impossible to interpret the cost of. The terms of a mortgage are so important to me that in some cases I will willingly pay 0.25$ to 0.5% point higher just to secure the terms and flexibility I need. 

Starting today, I URGE you to think a lot more strategically, be more informed on all of the terms and conditions of your next mortgage and when you think you have made the correct choice, take a read of this important article about the hidden and costly penalties that many mortgages have hiding within them. Then, before you sign, ask your financer what penalties are involved in your mortgage. If you are prepared with the facts and you have considered your strategic options, THEN you should agree to the terms and conditions, but not before. 

Here is the article on Bank Mortgage Penalties:  http://www.calumross.com/blog/bank-rates/big-bank-mortgage-penalty/


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