What is a "No-Frills" Mortgage? A no-frills service or product is where non-essential features have been removed from the product or service to keep the price as low as possible.
Depending on the lender, a “no-frills” mortgage rate might be up to 0.20% lower than a fully-featured mortgage. And while this could potentially save you a few hundreds of dollars over a 5-year term, please understand that it could also potentially cost you thousands (if not tens of thousands) of dollars should you need to break your mortgage early.
So if you’re considering a “no-frills” mortgage, here are a few of the drawbacks to think through:
- You'll pay a significantly higher penalty if you need to break your mortgage.
- You'll have limited pre-payment privileges.
- Potential limitations if you want to port your mortgage to a different property.
- You might be limited in your ability to refinance your mortgage (without incurring a considerable penalty).
Simply put, a “no-frills” mortgage is an entirely restrictive mortgage that leaves you without any flexibility. There are many reasons you might need to keep your options open. You might need to break your term because of a job loss or marital breakdown, or maybe you decide to take a new job across the country, or you need to buy a property to accommodate your growing family. Life is unpredictable; flexibility matters. Do you have any questions about this? Connect with me directly.
