So the most common question I hear from customers is, “What’s your best rate?” And why don’t you ask that 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 should be the most important question to ask when shopping for a mortgage. Right?
The least well kept secret? It is very easy to get a low interest rate on your mortgage. All you have to do is make a few calls for rate quotes and then pit your mortgage broker against your bank or vice versa and one of them will beat the other on the rate. Excellent!
So let’s come back to your question – “What is your best rate?” Now you might think this is an easy question for a mortgage broker to answer, but it really is very complicated. You just want me to tell you what my best rate is for a certain mortgage term. 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’s important to understand that the interest rate is only a small part of the terms 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 other 25 pages?
There are dozens of mortgage lenders in Canada – mortgage companies, banks, credit unions, trust companies, etc. for early termination of your mortgage, portability and assumption options, and even renewal terms. But you know what? There is very little difference in their rates.
What could be in the fine print? Maybe the mortgage is closed for the five year term. 100% closed. This is the trade-off for an extremely low rate.
Some of these low-rate mortgages are “no-frills” mortgages, which means they come with a lot of restrictive terms and potential landmines. If you engage in any of these products without reading all the fine print, which happens most often, you might find yourself in a situation that you might find difficult in the near future i.e. at over the next three years, as six of 10 Canadian mortgage holders break their mortgage at about 38 months.
There’s no denying that the rate matters, but what’s the right question you really should be asking yourself? “What’s 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 of the fine print of your mortgage terms and conditions.
Call me at 1-888-561-2679 and we’ll discuss the rate at some point in our conversation, but it’s really more important to me as a mortgage broker that you understand all of the terms of your mortgage contract.