The best mortgage rates

Originally post by April Dunn - Aug 7, 2021. 

Even though the frenzy of activity we saw with our spring real estate market seems to have settled down some for the time being, 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 is: “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 may 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 five-ear 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 three years given that six 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.

We recommend existing and potential mortgage borrower focus on more than simply the best rate.  Matching the best mortgage terms to fit your financial goals and personal situation is by far more important than getting the best available rate.   The best way to get the best mortgage for you is to speak with a mortgage professional who deals with dozens of mortgage products across many banks and other lenders.  Our mortgage brokers can be your best ally as they always have your best interest in mind.