You may have heard the term “no frills mortgage” thrown around when mortgage shopping. No, we’re not talking about the No Frills grocery chain here… So what exactly does “no frills mortgage” mean?
Generally speaking, a “no frills mortgage” is one offered by a lender that usually has a lower rate, but also comes with several trade-offs or stripped-down options. Some of these stripped-down options are:
- Quick-closing deadlines (the deal has to be done in less than 30 or 60 days, etc)
- Little to no prepayment privileges
- Restrictions on when prepayments and top-ups can be made
- No pre-approvals
- Lack of mortgage portability (might not be able to move the mortgage to another property without breaking the mortgage)
- Higher penalties
These products are designed for someone who wants the best rate, and doesn’t necessarily want to pay for added flexibility. There’s always a bit of a risk in taking a no frills mortgage – no one knows for certain what curve balls life may throw our way. But for those that are fairly certain they won’t need to break their mortgage, or have extra cash to pay down their mortgage, sometimes a no frills mortgage is a great way to save a little money.
There are currently some fantastic “no frills” mortgages out there, including a new one by RMG Mortgages called the Low Rate Basic Mortgage. If you’re interested in exploring low-rate, stripped-down mortgages (or see how they compare to full-featured mortgages), contact a mortgage broker in your area. We’d be more than happy to explain the various “no frills” and “full-featured” mortgages available, and discuss which ones would be the best fit for you!
