The Complete Guide on How to Shop for the Best Mortgage Rate
Most mortgage shoppers don’t discover the simple truth. Unfortunately, this costs them thousands – or tens of thousands of dollars over the years.
Here you will learn exactly what you need to get the upper hand and clobber your rate to the lowest level it can possibly go to.
Let’s take an honest look at mortgages from a distance. If we strip away the flashy marketing, professionally designed branches, and offices, and the ‘who’s who’ of the mortgage world – we see a relatively simple contract to lend you a specific amount of money, at a specific rate of interest. So given two, almost identical – or completely identical mortgage contracts, why would anyone want to pay a higher interest rate on one than the other?
Well, the Canadian mortgage industry is set up for just this. Every day, hundreds, if not thousands of people are signing up for the exact same mortgage, at different rates. There is absolutely 0 benefit that the higher rate payer, gets from the lower ratepayer. Considering the hard earned dollars at stake, this is a sad truth.
It’s not rocket science! Here is how to become the guy or girl, who lands the lowest rate.
In order to discover how to get the lowest rate, we’ll take a short walk through the three ways of getting a mortgage in Canada. We will go over the benefits of each of these three ways, and how you stand to save more for each.
1. The Bank Branch
Ultimately, over 90% of mortgages in Canada in some way or form, come from the big Banks. Bank branches offer familiarity, comfort and friendly service for the most part. But the fancy offices and familiar feel can often come at a cost.
Bankers are not usually forthcoming as far as offering their best rates go. A Bank will typically offer you a starting rate, and then an ‘exception’ or rate special. Trusting their relationship with their Bank, this rate special is where most mortgage shoppers usually stop. However, if you indicate that you are going to continue shopping for a mortgage, your banker may suggest that once you’re done looking around, to come back to the branch to ‘see what can be done’ regarding the rate. So maybe another bank is visited, or maybe you decide it might be a good idea to visit a Mortgage Broker.
2. Mortgage Brokers
Contacting a mortgage broker will give you access to multiple Banks and mortgage lenders through one handy source. Brokers usually know what lender has the best deal of the day, and in most cases will offer you a lower rate than you’ve been quoted by your Bank. In other words, brokers instantly make you more competitive by comparing several bank offers at once. Brokers are typically paid by the lender to process your mortgage, and will not charge you a fee.
In most cases, the mortgage quotes being offered are is some way or form, being sourced from the Big Banks. You may even get quoted a lower rate mortgage from a broker, that is actually from your own Bank. Sometimes a different brand is used to offer these lower rate, not to confuse your Banks brand, with two different mortgage rate offers.
Whether you go back to your bank branch with the lower rate or decide to proceed with the Broker, you’ve taken an important step in saving thousands of dollars on interest over your term. The only issue with going back to your branch, however, is that although you have managed to eek out a lower rate from your branch this one time, you will have to continue fighting your branch over time. Whenever there is any change to your mortgage, or on the renewal date at the end of your term – the Broker offers you a better, more impartial long term solution.
3. Discount Mortgage Brokers
Not all mortgage brokers are the same. A small group of mortgage brokers, known as discount brokers, differentiate themselves by offering even LOWER rates than a standard mortgage broker will offer. How do they do this?
Discount mortgage brokers take the processing fee or commission that Banks and lenders pay them and invest this commission into lowering your rate even further. Why would a mortgage broker want to lower their commissions? If a broker makes less money but is able to offer a lower rate, then they will attract more mortgage shoppers. So these brokers model their business to handle higher business volumes, and this is how they become successful. So its a win-win – customers receive the lowest possible ‘bought down’ rates, and the broker runs a solid operation. But what about service? Is there some cost to ‘processing’ higher volumes of customers?
This comes down to each individual discount mortgage broker. Some will offer better service than others. Usually, discount brokers will operate online exclusively. But this can have benefits. For example, communicating over phone and email gets you answers to your questions, and detailed information when you need it. No need to plan office visits and take time out of your busy day traveling to an office. There is nothing that can be done in an office, that can’t be handled faster over phone and email. So, like any business, it will cone down to the quality of service and dedication of the discount broker to offering great service, that will determine the outcome of your experience.
In summary, Banks will offer you good rates and a comfortable, recognizable atmosphere. Mortgage Brokers, in many cases, will offer you a slightly better rate than you’ll be quoted at the bank. Whereas a Discount Mortgage Broker will go to the furthest lengths to offer you the absolute lowest rate possible. So by finding a great discount mortgage broker, you can be sure to get the lowest rate possible in the market.
WE area a discount rate broker that stops at nothing to provide the lowest possible rate. But we don’t sacrifice service. Connect with us today to find out how you can get the best of rate and hassle-free, expert service. We promise to make this your best mortgage experience yet!
There you have it! The ‘secret sauce’ for saving thousands of dollars on your mortgage, now and for many years to come.