Often times, borrowers are fixated on their mortgage rate because it’s the one aspect of their home financing they know to ask about. But, it’s important to look beyond mere rates into the bigger picture surrounding what’s significant when it comes to your specific mortgage needs.

If we dollarize the difference between 2.99% and 3.04%, for instance, it works out to an additional $2.66 in your monthly payment per $100,000 of your mortgage. Over the course of a five-year term, this culminates into just $159.60 per $100,000.

While “no-frills” mortgage products typically offer a lower – or more discounted – interest rate (like the 2.99% used in the example above), when compared with many other available products, the lower rate is really their only perk.

The biggest problem with looking at rate alone is that you may end up paying thousands of dollars in early payout penalties if you opt for a five-year fixed-rate mortgage, for instance, and then decide to move before the five years is up.

No-frills mortgage products won’t let you take your mortgage with you if you purchase another property before your mortgage term is up – ie, portability is not an option with this product. Portability is an important option that could save you money over the long term if the home of your dreams is within your reach before your mortgage term is up and rates have risen, which they have a tendency to do over a five-year period.

This type of product is only plausible for those who have minimal plans to take advantage of benefits that will help pay off your mortgage faster – such as prepayment privileges including lump-sum payments.

Essentially, this product is only ideal for: first-time homebuyers who want fixed payments and have limited opportunities to make lump-sum payments during the first five years of their

mortgage; and property investors who need a low fixed rate and aren’t concerned with making lump-sum payments.

It’s understandable why these products may seem appealing. After all, not everyone feels they have the extra cash to put down a huge lump-sum payment. And who needs a portable mortgage if you’re not planning on moving any time soon?

But it’s important to remember that a lot can change over the course of five years – or whatever term you choose for your mortgage. You could get transferred, find a bigger house, have babies, change careers, etc. Five years is a long time to be anchored to something.

Many people won’t sign a cell phone contract for longer than three years that they can’t get out of, so why would they then sign a mortgage for five years that they can’t get out of?

The thing is, you can still obtain great mortgage savings without giving up the perks of traditional mortgages. For starters, many lenders are willing to offer significant discounts if you opt for a 30-day “quick close”.

And there are many other ways to earn your own discounts. For instance, by switching to weekly or bi-weekly mortgage payments, or by obtaining a variable-rate mortgage but increasing your payments to match those of the going five-year fixed rate, you’ll be ahead of the typical discount of a no-frills product before you know it – and you won’t have to give up on options.

Banks don’t give anything away for free – they’re there to make money. That’s why it’s essential to discuss the full details surrounding the small print behind the low rates. It’s also important to take into account your longer-term goals and ensure your mortgage meets your unique needs now and into the future.

As always, if you have questions about mortgage rates, or other mortgage-related questions, I’m here to help!

If you own an older home, chances are, you’re always on the lookout for ways to reduce your heating costs. Adding insulation to your home not only helps you save money right now, but it’s also a way to “future proof” your home – protecting you against energy cost increases down the road. A well-insulated, energy-efficient home reduces the need for heating in the cooler months and cooling in the warmer months.

By far the best time to upgrade your home’s insulation is when you’re doing other renovation work. For instance, it may not make much economic sense to remove the exterior cladding on your home simply to add more insulation, but if you’re replacing the cladding because it’s worn or you want to upgrade the curb appeal of your home, this is the perfect time to add insulation to the outside of the walls and seal up leaks.

Fortunately, there are many different options to achieve different levels of energy performance in typical older homes by adding insulation to the attic, walls and foundation, and reducing air leakage.

Increasing energy performance
The first step should always be to make your house more airtight. Use caulking and spray insulating foam to close up gaps around windows and doorways, and under thresholds. Inspect and replace worn weather-stripping and seals on windows and doors. Add foam gaskets behind the faceplates of electrical outlets and switches on exterior walls. Seal around outside faucets and vent hoods.

Doing this reduces drafty spots, making your home more comfortable, reduces exterior noise and dust, and actually helps the insulation you have in your house work better.

Air sealing is also one of the least expensive and most cost-effective energy-saving retrofit measures you can complete. Without it, you won’t gain the full benefit of increasing the existing insulation in your home as air leakage can reduce the effectiveness of many types of insulation.

You can save up to 10% on the space heating costs for a typical older home by improving the air tightness of the home by 30% and adding an additional R20 worth of insulation in the

attic, R10 on the basement walls, or R10 in the above-grade walls. The cost can range from $7,500 to $15,000 or more, depending on the insulation you choose, how much you install, other renovation work you are having done and how energy-efficient your house is to begin with.

To reduce your space heating costs by 25%, you may need to improve the air tightness of the home by 30%, add another R20 in the attic, and R15 to the exterior and basement walls. This work can cost anywhere from $18,000 to $30,000 or more depending on the full extent of the actual work that needs to be done.

Alternatively, instead of adding insulation, you may be able to achieve the same 25% goal by installing new Energy Star-rated windows. The cost of new windows is in the order of $15,000 or more depending on the number of windows to be replaced and the features selected. Ensure any new windows are well-sealed into their wall openings as air leakage can undermine their insulating value.

It’s important to consider the effect of adding insulation and air sealing on the whole house.
While improved air tightness goes hand-in-hand with reduced drafts and heat loss, it also reduces the amount of fresh air that can leak into your house, leading to moisture build-up and lingering odours if not balanced with energy efficient ventilation – a heat recovery ventilator, for example.

This is the reason that “build tight-ventilate right” has been the credo of energy efficient builders and renovators for more than 30 years.

Keep in mind that it’s always a good idea to get an energy audit of your house completed before you decide what to do and how much to invest. To formulate specific retrofit plans for your house, Canada Mortgage and Housing Corporation (CMHC) recommends that you retain the services of a qualified residential energy service provider to undertake an EnerGuide audit. Audits and ratings can be obtained from service organizations licensed under Natural Resources Canada’s EnerGuide program. For more information on finding a qualified service organization, visithttp://oee.nrcan.gc.ca/residential.

CMHC has a wide range of helpful information for homeowners on sustainable technologies and practices and renovating for energy available from www.cmhc.ca or by calling 1-800-668-2642.

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