What Is a “No-Frills” Mortgage? Let’s Break It Down 💡
A “no-frills” mortgage is exactly what it sounds like—a basic mortgage stripped of extra features in exchange for a lower interest rate. These types of mortgages can come in 0.10%–0.20% lower than a fully-featured mortgage, potentially saving you a few hundred dollars over a 5-year term.
Sounds good, right? But here’s the catch: that lower rate comes at the cost of flexibility, and in the long run, it could cost you thousands if life takes an unexpected turn.
🚫 Consider These Common Limitations:
Much higher penalties if you need to break your mortgage early
Restricted prepayment privileges, limiting your ability to pay down your mortgage faster
Limited or no portability, making it harder to move your mortgage to a new home
Refinancing restrictions, often locking you in unless you pay steep penalties
💡 Why It Matters:
Life is unpredictable. You might change jobs, relocate, go through a separation, or decide to upsize. If your mortgage doesn’t give you room to adjust, those savings can quickly vanish—and then some.
📞 Thinking about going the no-frills route? Let’s talk through the pros and cons based on your life plans. The cheapest rate isn’t always the smartest choice.
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