# Features to look for in mortgage?



## clovis8 (Dec 7, 2010)

What are the key features a person with great credit should request in a mortgage?

20/20
Cash back
Open/closed
Fixed/variable
Sub 3% rate


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## Four Pillars (Apr 5, 2009)

clovis8 said:


> What are the key features a person with great credit should request in a mortgage?
> 
> 20/20
> Cash back
> ...


Get the best rate possible. That's all you have to worry about. 

I'm pretty sure all mortgages have decent pre-payment options now.


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## andrewf (Mar 1, 2010)

Doesn't it really depend on what is important to you?


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## luisa (Dec 7, 2011)

As a pp mentioned, most allow prepayments in the range of 15 or 20% annually. 
Also look for-
-Ability to incrementally increase payments throughout the term, without affecting that prepayment allotment.
-Ability to double payments when desired without affecting the prepayment allotment.
-lowest possible penalty for breaking the mortgage, because your needs might change during the term.


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## Shayne (Apr 3, 2009)

clovis8 said:


> What are the key features a person with great credit should request in a mortgage?
> 
> 20/20
> Cash back
> ...


You have to ask yourself what suits you?

Will you be able to use 20/20 prepayment privileges?

What is the effective rate with the cash back and if you break the mortgage before the term is over will the cash back be clawed back?

Do you need an open mortgage? Will you be paying it off before the end of the term? Open is more expensive.

Fixed/Variable? What is your risk tolerance and the difference in the rates?

Sub 3%? Do you qualify for a variable or less than a 5 year term?

You should spend some time with a good mortgage broker or bank rep (I am a broker but I don't want to seem biased) and determine exactly what suits your needs.


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## Eclectic12 (Oct 20, 2010)

clovis8 said:


> What are the key features a person with great credit should request in a mortgage?
> 
> 20/20
> Cash back
> ...


I'd take the cash back off the list.

Any cash back mortgages I've been offered - when I've run the numbers, have been more expensive than the rest. Then too, a few had an extra penalty for the cash part, if breaking the mortgage early.

Also - think through how likely you are to use the privilege or option.


Cheers


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## marina628 (Dec 14, 2010)

The only way cash back works in your favor is if you can max the prepayment and the 100% increase in mortgage payments.I have done this one time and paid a $166,000 mortgage off in 5 years


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## Sampson (Apr 3, 2009)

marina628 said:


> The only way cash back works in your favor is if you can max the prepayment and the 100% increase in mortgage payments.


Not totally true.

We took a cash back mortgage a few years ago and there was no significant difference in the rate we were offered compared to the deeply discount rates (a few basis points here or there). There are excessively penalties if we break this mortgage. We put the cash back right into the mortgage and our effective interest rate on a 5 yr fixed was in the 2.5-3% range due to that prepayment.


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## canadianbanks (Jun 5, 2009)

For me the lowest 5-year fixed rate is the most important when comparing mortgages, and the second thing I'm looking for is generous prepayment options.


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## marina628 (Dec 14, 2010)

Currently Cash Back offers are about 5.5 -6% and yes put that cash on mortgage.If you need that 5% back in your hand do not even buy!


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## clovis8 (Dec 7, 2010)

marina628 said:


> Currently Cash Back offers are about 5.5 -6% and yes put that cash on mortgage.If you need that 5% back in your hand do not even buy!


I was offered 3.6% with 2% cash back on 4 year fixed. 

I am going with 3.09% 4 year fixed.


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## Guigz (Oct 28, 2010)

clovis8 said:


> I was offered 3.6% with 2% cash back on 4 year fixed.
> 
> I am going with 3.09% 4 year fixed.


When did you get pre approved?

I got a 4 years fixed at a lower rate *with* a 1.2% cash back.


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## Shayne (Apr 3, 2009)

Two thing you have to consider with cash back rates are:

1. What is the effective rate with the cash back? Very few can calculate this accurately.

2. Will I have a need to break the mortgage during the term and if so how much of the cash back will be clawed back?


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