The Mortgage Centre’s rate page has a very sage title:
“Is it the best rate, or the best rate for you?”
Its point being: A lot of websites claim to have the best rates, but there’s always more to the story.
For one thing, probably 95% of “best rate” claims are false. More importantly, as the Mortgage Centre rightly suggests, the lowest rate is not necessarily the best mortgage rates for you.
Unless you know who the quoted lender is, and know that lender’s criteria for credit score, debt ratio, property type, loan-to-value, income, etc., there’s no way to tell on your own if you meet its standards. (Albeit, someone proving $100,000 income the past few years, putting down 20% on a marketable home, with a 35% TDS, and a 720 beacon score, can feel confident about qualifying at most lenders [just as an example]).
Back to the point, there are lots of qualification hoops to jump through with some lenders—especially the lowest cost lenders.
Moreover, there are various economic dangers strewn about the fine print of many mortgages. Examples include:
- Zero prepayment privileges
- 12-month interest penalties
- IRD penalties based on bond yields
- Fully-closed terms (no way out until maturity)
- Ultra-short rate-hold periods
- No pre-approvals
- No portability
Other annoyances:
- Horrible post-closing service
- Slow approval times
- No online access
- Unexpected fees
It is the job of mortgage planners to filter the plethora of mortgages and present the best overall value to you. When determining overall value, rate is the #1 criteria, but only after a mortgage is determined to be suitable.
There’s no downside to good advice, so get as much of it as you can. As Canadian Mortgage Professional magazine very wisely wrote: “Homebuyers who ask mortgage professionals ‘What is your best rate?’ are not going to be well served by a mortgage professional that simply responds with a number.”
the Best rate for ‘you’ – great article! I think we all can learn that there is more to a mortgage than just the rate. I’m learning more and more and this Blog is very helpful and informative to help people make more informed choices.
Great article. This is absolutely true. A great rate on the wrong product can be extremely detrimental to the clients. eg. For example, a great variable rate when the client is risk averse is very detrimental to the client. 5 yrs. fix rate, when the client plans to upgrade in two years may also be detrimental….and examples can go forever. Conclusion?? Best rate doesn’t mean the best solution for the clients.
Good info article. Thanks for sharing this post.