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The Mortgage Checklist - Part 6 (Other Mortgage Features)

If you're applying for a mortgage, there are some things you will need to know.  As a result, we have created a mortgage checklist, so you can ask your lender/broker the right questions.  Here is part 6 of 9, featuring questions about other mortgage features.

Other Features

29. Can I split the mortgage into different parts?

"Hybrid mortgages," as they're called, let you lock part of your mortgage into a fixed rate, or various fixed rate components, while the other parts may float at a variable rate. The purpose is to diversify your rate risk.

If you pick a mortgage with both long and short terms, remember that the lender may not offer you the best rates on the renewal of your shorter term. It knows you'd have to pay a penalty to get out of your longer term, making you less rate sensitive.

30. Can you offer the amortization I want?

Some lenders have minimum amortizations (like 18 years) while a handful of others still offer amortizations up to 35 years (assuming you have 20 per cent-plus equity).

31. Does the lender let me check my balance and remaining amortization online? Make prepayments online?

Major banks and large non-bank lenders (like First National, Street Capital and the big credit unions) usually have the best online access.

32. Is the lender a bank or credit union with branches?

Nowadays you can fully service your mortgage online or by phone, but some people still like a branch presence.

Almost all lenders link to your chequing account to automatically withdraw mortgage payments and make prepayments. So it's no longer inconvenient to separate your mortgage and banking.

There are over 300 mortgage lenders in Canada. Don't fear small lenders that you've never heard of.

33. Do you offer early renewals at your best discounted rates with no fees or penalties?

A 120 to 180 day early renewal can potentially reduce your rate risk. But beware of lenders that try to create false urgency and lock you into a "limited time" offer well before your renewal date.

34. Do you offer an all-in-one style mortgage where I can combine chequing, savings and my mortgage into one account?

Doing this can save interest as your spare cash lowers your mortgage balance, thus reducing the amount used to calculate your interest.

35. If I sell my house, can the buyer assume my mortgage?

36. If I get a one-year fixed, can it be converted to any of the lender's fixed rates, at any time?

Only a handful of lenders offer this option, which gives you variable-rate type features without committing to a long term.

37. Can I skip a payment if needed? If so, how often and under what circumstances?

"Payment vacations" can be handy in emergencies. But some lenders require that you make an equivalent pre-payment first. Remember that skipped payments aren't free. You still have to make all payments eventually, and interest accrues in the meantime.

38. Do you pay profit sharing on my mortgage?

Available only at credit unions who rebate a small portion of your interest paid. You can access these funds only after a vesting period, which can last 3-7 years or more.

39. What default insurer will insure my mortgage?

Default insurance generally applies if you have less than 20 per cent equity. When you switch lenders with an insured mortgage, you must ensure that the new lender accepts that insurer's mortgages. CMHC and Genworth allow you the most flexibility when switching lenders.

40. If I purchase creditor life insurance through you, can I port that insurance to a new lender without having to requalify and lose the premium I'm paying on my current mortgage amount?

Insurance premiums go up as you age, so you want insurance that's not tied to one lender. That way, you can keep your premiums as-is on your original mortgage amount, even if you change lenders.

If you don't have portable creditor life insurance and get sick, your pre-existing condition may not be covered by the new lender's insurer.