Whether you are shopping around for your very first mortgage or whether your mortgage is one of the one in six that are coming up for renewal this year, there are no shortages of products out there for you to consider. And since mortgage rates are at their lowest since 2017, now is a great time to get a mortgage.
But how do you go about finding the best mortgage for your situation? Well, in general you’ve got three options. You can go to your bank. You can go to a mortgage broker. Or you can try the DIY approach.
Perhaps the biggest advantage of going to your bank, is that it is an institution that you are familiar with. You’ve already got a chequing or savings account there. And perhaps you also have other products there such as a car loan or an investment account.
Let’s face it. Going to the bank is just plain convenient.
But convenience can be expensive. Without shopping around, you’ll have no idea of whether you’re getting the best rate - and you could be leaving thousands of dollars on the table over the term of your mortgage.
A mortgage broker is someone who will work on your behalf, comparing the rates and terms of different mortgages. Also, since mortgage brokers have well established relationships with dozens of lenders, they can often secure better rates than if you were to call those same lenders yourself.
Another advantage of working with a mortgage broker is that it allows you to gain access to a special category of lender called a monoline lender. These are lenders that work exclusively through mortgage brokers and who often better interest rates as well as better terms such as better prepayment offers and lower penalties.
Mortgage brokers can also offer more options to people who might have difficulty getting a loan through a traditional lender. This includes people who are self-employed, new to Canada, or who have little or poor credit.
Some people just love to do things on their own. And in the age of the Internet, it has never been easier to compare different mortgage rates on your own through a variety of mortgage rate comparison sites.
These sites however do have some drawbacks that you need to be aware of.
People often assume that the mortgage with the lowest rate is the best one for them – but this is not necessarily the case. It’s important to take a look at the terms in order to see if the mortgage will meet your needs.
For example, a mortgage may have a lower interest rate but also come with very strict penalties. Or it may have an amortization period that is not ideal for your situation.
When it comes to finding the best mortgage for you, I believe that most Canadians’ best option is to work with a qualified mortgage broker. In this way, they have access to the widest variety of lenders and have an expert on hand to explain the terms and help them secure the mortgage contract that is most suited to their needs.
If you would like to work with a professional mortgage broker – or even if you would like a second opinion after talking to your bank or exploring the DIY approach – I invite you to contact me today.