Have you ever spent several hours shopping around for the best price on a car, bed or television? If so, this is a great trait to have when it comes to saving money. As long as you don’t mind investing the time, there is money to be saved on many purchases you can shop around for in life. Not only is it useful for vehicles, furniture and electronics, it’s also a great idea for mortgages too. Here are some of the benefits of shopping around for a mortgage.
As well as securing the best mortgage rates in Ottawa, shopping around can also prevent unforeseen penalties and fees that may only surface months or years later. For example, mortgage penalties that may seem small but actually cost more than you think. Or additional costs at renewal if wanting to change lenders. Such as with a collateral mortgage.
How do you shop the market for a mortgage? Luckily, Ottawa mortgage brokers will do all the work on our behalf. Think of them as Expedia but with lenders instead of hotels. A mortgage broker has access to lenders such as TD Canada Trust, Scotiabank, Alterna Savings, Manulife and many more. With a mortgage broker, you will get great guidance and education on the available options. An Ottawa mortgage broker is an expert and will know exactly how to help you. When looking for the very best rate and options, this is the obvious choice. Plus you do not have to pay for a mortgage broker.
Another option is to visit your bank branch. If doing this, here are some questions to ask your bank representative to assure they having the knowledge and experience to guide you.
Not only with offering mortgages, but with owning real estate as well. How many years have they been in the business? Are they renting or do they own? Have they ever bought a rental property? Do they only know the one bank's product they have or have they worked at other banks so they have a wider knowledge of the options available?
As a caution, bank employees do not have to pass any mortgage courses or be licensed to sell mortgages. They also do not complete annual testing and relicensing to sell mortgages. With that, it's up to the consumer to determine they are experienced enough to offer advice.
Plus, bank representatives do not have to inform you about better options for a mortgage that they may know of outside their bank.
Do they plan on being in the same position in the future? If possible, it’s always best to find a representative that plans to stay where they are for a long time as they will know your position. This will allow them to be able to help with any issues you may have in the years ahead. Looking for a promotion or new job opportunity is great, however a common complaint from customers is that their bank representatives move around too frequently.
Also, many of the bank's mobile mortgage specialists are not able to assist with your renewal and maintenance to the mortgage, like changing the payment frequency. For this, you usually will have to work with the branch and unfortunately with someone that is not familiar with you, your mortgage and your finances. With some banks the mobile mortgage specialist cannot even sign the mortgage documents with you. In this case, you are transferred to a branch to complete the signing and be introduced to the other products the bank has available for you.
Be sure to discuss all the types of mortgages they offer to know more about the different terms and rates. Many banks only have one option for each type of mortgage, such as one 5 year fixed rate mortgage to choose from.
Learn more: 5 year fixed rate mortgage
If you do not want to be faced by extra charges when changing lenders for a better rate at renewal, make sure you understand the difference between a conventional and collateral mortgage.
Learn more: Collateral mortgage
How are their prepayment penalties calculated? Do they use the bank post rate or a discounted rate when calculating your IRD. If there is a chance that you have to get out of the mortgage before the maturity date, this will be important to know.
Also, what are their prepayment privileges? Do they allow an extra 10%, 15% and so on. Some banks only offer 10% and 15% pre payment options where other lenders allow 20% or more.
After your meeting with the bank, it’s time to contact a your Ottawa mortgage broker and you can ask them the exact same questions. All it takes is an hour with each and you will have reviewed dozens of mortgage lenders with your mortgage broker and just one option with your bank.
From this, there should be no reason you can’t secure the best mortgage rates in Ottawa.
Contact me today to learn more about the benefits of shopping around for your mortgage.