Broker vs. Bank / Mortgage Renewal / Pre-Payment / Purchase / Rates & Terms / Refinance / Rental Properties

The fine print of deeply discounted interest rates

Everyone has been talking about a ridiculously low rate a bank has recently offered…

I have been getting a lot of questions about it and the restrictions surrounding it. I always tell every borrower to ensure they have read and understand the fine print when they are getting a deeply discounted rate. The reason I encourage them to read all details is because usually these low rates come with some restrictions. Some of the most common restrictions, conditions or whatever you want to call them, associated with some of the “no frills” or deeply discounted rates are;

Due on Sale Clause

This means that the only way you can break your term early is if you are selling the property. You cannot break your term to refinance for a lower rate or to access your equity.

Limited pre-payment priviliges

Most of the “no-frills” rates come with the condition that you can only increase your payment once yearly by 10%, and that’s it. Compared to regular pre-payment privileges of a 15% payment increase, and up to 15% lump sum throughout the year.

Quick Closing Date

Most standard rate holds are for 120 days, in order to get a deeply discounted rate the lender may stipulate that your mortgage must fund within 30 or 45 days in order to qualify for that low rate.

Minimum Credit Score Requirement

A lender may have a minimum credit score requirement in order to qualify for the deeply discounted rate. Logic behind it is this; if they are giving you such a great rate, they want to lower their risk of you defaulting on your mortgage payment by requiring you to have a positive credit history with good repayment habits.

Occupancy Requirements

In order to qualify for certain rates the lender may stipulate you have to reside in the property. That is their way of saying no rental properties.


Those are the most common clauses contained in the fine print, obviously there are more but they are very lender specific. If you have a question about your mortgage, it is usually best to go straight to your existing lender and get the answer straight from the horses mouth. If they can’t answer it for you, please don’t hesitate to call us and we will do our best to find a solution for you.



16 thoughts on “The fine print of deeply discounted interest rates

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