It’s almost instinctive to search for the lowest price and the lowest rates, whether you’re shopping for groceries, appliances, credit, or even something as major as a mortgage. However, despite the immediate benefit of spending less money, anyone who has ever spent money on fast-fashion will tell you cheaper, doesn’t necessarily mean more cost-effective. The same is absolutely true of mortgages! A low mortgage rate looks great on paper and floods your brain with dopamine at the time, but there are many reasons a low mortgage rate isn’t always the best deal.

Is the best rate your best option?

If you’ve been reading this blog for any amount of time, you’re probably by now very familiar with the concept of making choices based on your personal and financial situations. Picking a mortgage rate requires the same “it depends” decision-making process. It’s sometimes better to focus on the mortgage product than the mortgage rate. Making the wrong decision in the short term will have impacts on your long term goals if not carefully considered.

One of the common points of discussion is often the decision between fixed and variable rate mortgages. It’s easy to look at the low interest and security of the fixed-rate and choose it. However, once again, depending on your situation, this may not be your best option. A lower fixed-rate for five years seems good on paper, but what are the chances of your situation changing due to personal or financial circumstances. Fixed-rate products can have significant penalties to break during your term – depending on the lender and type of fixed-rate mortgage you choose.

Variable-rate mortgages can offer more flexibility in breaking your term, with most lenders capping this penalty at 3-months interest. There is some risk and uncertainty when rates change and any increases in prime translate to increases in the interest you will pay on your mortgage. Therefore, it’s important to have an idea of the bigger picture, and your goals, before signing on the dotted line.

What is “no-frills” financing?

Outside of mortgage interest rates, you should think a bit about the value of unbiased advice. For some consumers, the lowest rate might be all you are looking for, but this usually comes at a cost. There are many of “no-frills” brokerages that will provide rock bottom rates and usually nothing more. If you’re not sure about planning your financial future and creating a budget to help you reach these goals, you should carefully consider your options.

Full-service mortgage brokers do much more than provide you the lowest rate possible. An unbiased mortgage broker will provide you with a number of options based on your financial situation and goals. Sometimes, the lowest rate is not the best rate for you. If you are planning on selling a property in the short term, your mortgage product will look a lot different than if you want to make this a long term home. Mortgage brokers help you every step of the way and can help you understand the right decisions and products to help you not just today, but into the future.

Don’t fall for the lowest rates

If you’re in the market for a mortgage there is no doubt that you’ve no doubt come across ads from competing firms each offering the best rate. These ads often promise the lowest possible rates, claim to cater to most incomes, and any number of pie-in-the-sky promises to get you to chose them as your mortgage lender.

Don’t be fooled; these firms are acting in their best interest, not yours. The “best deal” when it comes to a mortgage is highly dependent on your situation. The smart move is to work with a mortgage professional individually so they can work with you to navigate the best deal for you and your family. The lowest rates always look better on paper. Building a relationship with an unbiased mortgage professional ensures that the product matches your needs.

Get a second opinion, first

If you’re wondering what the best deal for you is, you should consult with a local mortgage broker. Working with a mortgage broker means that they are not attached to lenders, which enables them to find the best deal for you. They are highly trained and educated professionals in the field and can navigate any hiccoughs that may come up in the mortgage process. A broker works for you, not the lender.

If you’re thinking about buying a home or would like a second opinion on your options, feel free to reach out to book an appointment! You can give me a call at (705) 333-4338, or get in touch with me here!

Customer Service Numbers:

CMHC: 1-800-668-2642
Genworth: 1-800-511-8888
Canada Guaranty: 1-866-414-9109

ATB: 1-800-332-8383
B2B: 1-800-263-8349
BMO: 1-877-895-3278
Bridgewater: 1-866-243-4301
CIBC: 1-800-465-2422
CMLS: 1-888-995-2657
Optimum: 1-866-441-3775
Equitable: 1-888-334-3313
Connect First: 403-736-4000
Chinook Financial: 403-934-3358
First Calgary Financial: 403-736-4000
First National: 1-888-488-0794
Haventree: 1-855-272-0051
Home Trust: 1-855-270-3630
HSBC: 1-888-310-4722
ICICI: 1-888-424-2422
Manulife: 1-877-765-2265
MCAP: 1-800-265-2624
Merix: 1-877-637-4911
Marathon: 1-855-503-6060
RBC: 1-866-809-5800
RFA: 1-877-416-7873
RMG: 1-866-809-5800
Scotiabank: 1-800-472-6842
Servus: 1-877-378-8728
Street Capital: 1-866-683-8090
TD: 1-866-222-3456