The most common question I hear from potential customers is – “What is your best price? And why wouldn’t you ask this question? The media is inundated with articles on how to shop for the best mortgage rate and rate sites are popping up all over the Internet. This must be the most important question to ask when shopping for a mortgage. Right?
The least well-kept secret? Getting a low interest rate on your mortgage is really easy. All you have to do is make a few calls to get quotes, then pit your mortgage broker against your bank or vice versa and one of them will beat the other over the rate. Excellent!
So let’s go back to your question – “What is your best rate?” Now you think this is an easy question for a mortgage broker to answer, but it is really very complicated. You just want me to tell you what my best rate is for a certain mortgage period. But I am in conflict and I don’t really want to answer this question directly because I want you to understand that you are asking the wrong question.
It is important to understand that the interest rate is only a small part of the terms and conditions of your mortgage. If you look at your mortgage documents, the interest rate is only mentioned once on the very first page. Have you ever wondered what was in those 25 other pages?
There are dozens of mortgage lenders in Canada – mortgage companies, banks, credit unions, trust companies, etc. And there are many differences in their mortgage documents that set out the terms of your mortgage, such as prepayment options and penalties for breaking your mortgage earlier, portability and support options, and even renewal terms. . But you know what? There is very little difference in their rates.
What could there be in fine print? Maybe the mortgage is closed for five years. 100% closed. This is the trade-off for an extremely low rate. You can only cancel your mortgage if there is a bona fide sale of your home, which means that there is no way to access the equity in your home during the term of the mortgage. mortgage.
Some of these low rate mortgages are “no frills” mortgages, which means that they are fulfilled with many restrictive conditions and potential landmines. If you commit to one of these products without reading all of the fine print, which most often happens, you could find yourself in a situation that could be difficult for you in the near future, which means within the next three years, given that six out of 10 Canadian mortgage holders default on their mortgage at around 38 months.
There’s no denying that the rate is important, but what is the right question you should really be asking yourself? “What is the best mortgage available that will meet my short and long term goals?” And, yes, it should have a competitive interest rate. Make sure you read and understand all the fine print of your mortgage terms and conditions.
Call me at 1-888-561-2683 and we will discuss the rate at some point in our conversation, but it is really more important to me, as your mortgage broker, to make sure you understand all of the terms of your mortgage contract.