We are in the middle of a frenzy of activity with our Spring Real Estate Market so there is a big competition of low rate offerings in the Mortgage Market that has both Mortgage Brokers and banks competing with each other and advertising very low rates.
So the most frequent question that I hear from clients – “What is your best rate?” and why wouldn’t you ask that question? The media is flooded with articles about how to shop for the best mortgage rate and rate sites are popping up all over the internet. That must be the most important question to ask when you are shopping for a mortgage. Right?
The worst kept secret? It’s really easy to get a low interest rate on your mortgage. All you have to do is make a couple of calls for rate quotes then pit your mortgage broker against your bank or vice versa and one of them is going to beat the other on rate. Excellent!
So back to your question – “What is your best rate?” Now you make think that this is an easy question for a Mortgage Broker to answer but it’s really very complicated. You want me to just tell you what my best rate is for a certain term of mortgage. But I’m conflicted and I don’t really want to answer that question directly because I want you to understand that you aren’t asking the right question.
Understanding that the interest rate is only one small part of your mortgage’s terms and conditions is important. If you take a look at your mortgage documents, the interest rate is only mentioned once on the very first page. Have you ever wondered what’s in those other 25 pages?
There are dozens of mortgage lenders in Canada – mortgage companies, banks, credit unions, trust companies, etc. and there are many differences within their mortgage documents that lay out the terms and conditions of your mortgage such as prepayment options and the penalties for breaking your mortgage early, 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? Perhaps the mortgage is closed for the 5 year term. 100% closed. That’s the trade-off for an extremely low rate.
Some of these low rate mortgages are “no-frills” mortgages which means they are packed 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 you may find difficult in the near future, meaning sometime in the next 3 years given that 6 out of 10 Canadian mortgage holders break their mortgage at about the 38 month mark.
There is no denying that rate is important but what is the right question that you should really be asking? “What is the best mortgage available that is going to meet both my short-term and long-term goals?” and yes it should have a competitive interest rate. Ensure that you read and understand ALL of the fine print in your mortgage’s terms and conditions.
So give me a call at 250-826-3543 and we will discuss rate at some point in our conversation but ensuring that you understand all of the terms and conditions of your mortgage contract is really more important to me as a Mortgage Broker.
April Dunn is a Mortgage Broker who has been assisting clients to purchase, refinance or renew their mortgages for over 25 years. April is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects and specializes in Strategic Mortgage Planning. April provides a full range of residential and commercial mortgage financing for clients all over the province of British Columbia and across Canada through the Mortgage Architects network. April can be reached at 250-826-3543 or firstname.lastname@example.org