A growing number of mortgage consumers are looking for features beyond just a great rate.
Just 13% of mortgage holders said the rate was their sole consideration when choosing their mortgage product last year, down from 15% in 2020, according to Mortgage Professionals Canada’s recently released Semi-Annual State of the Housing Market report.
Borrowers indicated a host of other factors they considered when choosing their mortgage. Here’s a look at some of the top considerations that influenced their decision:
- Whether the rate was fixed or variable (33%)
- The borrower’s familiarity with the lender (32%)
- The payment frequency options that were available (28%)
- The advice provided by the mortgage professional they were working with (25%)
- The amortization period (23%)
- The prepayment options that came with the product (20%)
- Access to the lender’s other suite of financial products (16%)
- The reputation of the lender (10%)
Flexibility can potentially save you more in the long run
These results highlight that, despite the prominent focus on getting the best mortgage rate, many borrowers understand other features can be equally, if not more, important.
Take the prepayment flexibility, for example. A mortgage with generous prepayment options—meaning the amount of the mortgage you can prepay each year without penalty—could save you more in interest cost over the life of your mortgage compared to one with a slightly better rate but more restrictive prepayment privileges.
The survey found nearly a third of mortgage holders (30%) are currently paying more than their minimum mortgage payments. So, prepayment privileges are clearly an important consideration for a large segment of borrowers.
The same goes for payment frequencies. If you’re wanting to aggressively pay down your mortgage, having the option to make accelerated bi-weekly payments could be more financially beneficial to you than a slightly lower rate.