To start off. I am in no way putting down any one lender or financial institution. All I'm doing is simply giving you the facts so you, the public, are more cognisant of what truly lies behind a mortgage.
This is some of the not so good that lie behind one lending institutes great low rate mortgage. That is, if you can even obtain that great low rate.
• Interest rate premiums will apply when certain debt servicing requirements are not met and if your credit score isn't as high as they want. (with other institutes I have access to, the rate you see is the rate you get)
• No transfers of your mortgage to a new home without a penalty. The lender will only do a refinance meaning the client must pay their own legal fees. (this is not good. You should be able to take your mortgage with you and do a blend of rates with no penalty. They show you a great rate, however, you may end up paying much more in the end. If you took the rate slightly higher with this option then you would end up way ahead)
• Registers all mortgages as Collateral Mortgages. (See here why these are not good http://gitersos.blogspot.com/2011/04/collateral-mortgages.html)
• Lender does not collect property taxes on the client’s behalf.(Not necessarily a bad thing, however, I would highly recommend this option as making small payments to build up a property tax payment is much easier than waiting until the end of the year to pay one large lump sum)
• Pre-payment privileges are 20% on the anniversary date ONLY. (Most other lenders allow you to prepay up to 15-25% with as many payments a year as needed with a minimum payment of $100 a time. This option is much better as you are continuously paying your mortgage down which means that you are pay less interest overall)
• If the mortgage amount is less than 65% of the homes value then they may be able to waive an appraisal. An appraisal comes with a cost of $250(most lenders I deal with will not need an appraisal. The only time an appraisal is a must is when you put 20% or more down, and it's a rental property or your going under a self employed, stated income program.
• Pre approvals/rate holds are only 90 days not the typical 120
• The branch will do a call and try and sell extra products i.e. life insurance prior to funding
• Clients have to go to the branch and set up an account prior to closing adding extra steps to the process and taking up your time
• The lender may request you to pay out and close revolving credit product(s) i.e credit cards. I've seen an instance where a young client had to CLOSE her only two revolving credit cards with a mere $2,500 limit/balance on each. The credit bureau will be impacted negatively when you close accounts. And then she'll need to re-apply for a new credit card to keep her credit in check, which will then take more points off her score and take up time to do so.
I've also had another client with a line of credit and NO balance and the lender wanted it closed.
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