If you’ve been researching buying a home and getting a new mortgage, or re-financing an existing mortgage, you probably know that mortgage rates are not cast in stone. There is lots of competition for your mortgage business, especially in urban areas like the GTA. Toronto, Mississauga, Etobicoke, and Oakville are all desirable locations for mortgage lenders.
Who gets great mortgage rates? Can you?
A paper published by the Bank of Canada a while back found that there is a significant amount of variability in interest rates for customers, resulting in a difference of thousands of dollars over the life of the mortgage. What creates that difference is shopping around, taking the time to do your research, and, most importantly, negotiating hard. They compare shopping for a mortgage to shopping for a car, a house, or health insurance. They noted that “the burden of gathering multiple quotes lies on consumers”. But because “consumers also differ in their bargaining ability” and mortgage knowledge, the effect was vastly different rates paid by customers.
What helps level the playing field when shopping for a mortgage?
Well, for one thing… Using a mortgage broker! The Bank of Canada stated outright that people who use a mortgage broker pay lower rates on their mortgage, since the mortgage broker takes on the legwork of searching for the best mortgage rate and terms. When mortgage companies are giving us their rates, the competition is already built in. They know we can choose to take our clients to many other lenders, so they don’t try to put us through that cliched “used-car salesman” experience. We’re told their best rates right away.
Want to get great mortgage rates? How good are your negotiating skills?
Mortgage lenders should be competing for you
If you’ve been researching buying a home and getting a new mortgage, or re-financing an existing mortgage, you probably know that mortgage rates are not cast in stone. There is lots of competition for your mortgage business, especially in urban areas like the GTA. Toronto, Mississauga, Etobicoke, and Oakville are all desirable locations for mortgage lenders.
Who gets great mortgage rates? Can you?
A paper published by the Bank of Canada a while back found that there is a significant amount of variability in interest rates for customers, resulting in a difference of thousands of dollars over the life of the mortgage. What creates that difference is shopping around, taking the time to do your research, and, most importantly, negotiating hard. They compare shopping for a mortgage to shopping for a car, a house, or health insurance. They noted that “the burden of gathering multiple quotes lies on consumers”. But because “consumers also differ in their bargaining ability” and mortgage knowledge, the effect was vastly different rates paid by customers.
What helps level the playing field when shopping for a mortgage?
Well, for one thing… Using a mortgage broker! The Bank of Canada stated outright that people who use a mortgage broker pay lower rates on their mortgage, since the mortgage broker takes on the legwork of searching for the best mortgage rate and terms. When mortgage companies are giving us their rates, the competition is already built in. They know we can choose to take our clients to many other lenders, so they don’t try to put us through that cliched “used-car salesman” experience. We’re told their best rates right away.
Want to learn more?
Check out my posts on buying a home, pros and cons of mortgage features, and mortgage planning here.
To get more deets on how mortgage brokers work, check out some of my other posts.
And, for a no obligation chat about your financial situation, please don’t hesitate to contact me.
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