How to Get the Best Mortgage Rate

May 30, 2012

3 Steps To Getting The Best Mortgage Rate

Who doesn’t like a good deal? And when it comes to paying interest on your mortgage, the price you pay to borrow money, you want a good deal. So how do you go about getting the best interest rate for your mortgage?
The Canadian interest rate market is very competitive and fortunately, there are plenty of options borrowers can go after. At any given time a lender may be offering a rate special to gain market share or to attract new business. Below I offer 3 steps to getting the best mortgage rate for any borrower. First time buyer or existing home owner ready to renew, check out my 3 steps.
1. Do Your Homework: You don’t need to be an economist to make an informed mortgage decision. Find out what the mortgage market is doing. Are we in an increasing or decreasing interest rate environment? Is fixed or variable the more viable option? Should you take a short term or long term mortgage? There is plenty of information online. You should also chat with your mortgage broker to find out what they are suggesting given current market conditions.
2. Shop & Compare: Identify what mortgage option works for you then check out the rates. There are plenty of resources online and a quick search will help you find the best rates. Get a sense of what is available, inform yourself, then contact your mortgage broker to find out what he can offer you. If you come across some incredible rates that sound to good to be true, be cautious. You get what you pay for. There are some discounted, no frills mortgages offered through smaller lenders who might not necessarily offer you the best mortgage due to lack of options, restrictive policies and no costumer service. In the long run, this can cost you more.
3. Decision Time: After doing all of your homework you may end up with multiple lenders offering similar rates and products. How to decide? What borrowers sometimes fail to realize is that paying off a mortgage is done in multiple stages over the life of your typical 25 year mortgage. CMHC’s most recent mortgage customer survey found that 88% of borrowers stayed with their existing lender at maturity. The reality is that not all lenders offer you competitive rates once you become a customer. You want to pick a lender whose mortgage pricing model consistently offers the lowest, most competitive rates to avoid having to constantly switch lenders at renewal. In my experience the big 5 bank’s tend to take advantage of borrowers complacency after 5 years and urge them to renew at significantly higher rates. There are a few lenders that deal through mortgage brokers however, who remain consistently competitive and offer their clients outstanding rates at renewal time.


Christopher Molder

Mortgage Broker

Christopher is a mortgage broker based in Toronto, Canada. And a son of a broker too. He’s a second generation mortgage broker. Following in his father’s steps he joined the family mortgage business straight out of university.