Tips to Get a Better Rate on Your Mortgage
Housing is a hot topic for many consumers across the country. With housing prices in many markets pushing, and sometimes exceeding, the limits of affordability, saving money on mortgages is more important now than it has ever been for anyone with a mortgage or anyone thinking about getting one.
While hunting for a mortgage can feel overwhelming, the good news is that it doesn’t have to be. Yes, getting the right kind of mortgage does take time and effort, but, if saving money and getting a good deal are your thing, then you’ll want to keep reading.
There are lots of great resources for consumers on how to shop for a mortgage, but what we wanted to contribute to the conversation is the insight we’ve gained from running mystery shop programs. Through our research and evaluation of thousands of mystery shops for financial services, including mortgages, the one thing that consumers need to know about getting a better rate is this: you have to ask for one.
It may come as no surprise that a mortgage lender isn’t necessarily going to lower a rate for you out of the goodness of their heart. And, according to research about the way Canadians tend to shop for mortgages, Canadians aren’t doing themselves many favours either, as we tend to be a bit sheepish when it comes to shopping around and negotiating for better mortgage rates.
So, what can you do to improve the odds of success in getting a better mortgage rate?
One of the best tips is to shop around. It may not seem like rocket science however it is surprising how many individuals don’t shop around enough.
The research has shown that those with higher incomes tend to over pay for mortgages and that there is some evidence to suggest that the more business you have with a financial institution, the less likely they are to give you a better deal on a mortgage – which is counterintuitive to say the least. What it does highlight the importance of, however, is actually going beyond just the same financial institution where you might do most of your banking to look for that mortgage.
Another tip, and this is something that many people looking for a mortgage rate don’t know about is that there is “discretionary” pricing that lenders – especially the big banks – are able to give to borrowers. This wiggle room varies from bank to bank, but it’s important for consumers to know that the posted rate is almost always not the final offer.
A very interesting observation from our research shows that it is even worth trying different locations of the same bank when hunting around for a mortgage. Even within the same city, what kind of rate you get can depend on who you end up talking to and how eager they may be to win your business.
Finally, if you do have a considerable amount of business with a particular institution – and even if you don’t – leverage your assets and where you can move them to (or away from). Remember, the financial services space, especially mortgage lending, is very competitive and the math clearly favours hanging on to a customer rather than losing one. Mortgages are a significant personal financial decision – if not the most significant one for many Canadians – so it pays to stretch your dollar as far as you possibly can.
While negotiating may seem stressful to many, paying more than you have to in interest or fees means that you’re financing your lender’s happiness instead of your own.