Benefits of shopping around for your mortgage:
Have you ever spent several hours shopping around for the best price on a sofa or television for your home? 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’s money to be saved with many purchases you make in life. Not only is it useful for furniture, electronics and books, for example, it’s also a great idea for mortgages too.
As well as securing the best rates, shopping around can also prevent those pesky ‘hidden charges’ that only surface months or years later. For example, mortgage penalties may seem small but they can actually cost more than you think.
How do you shop the market for a mortgage?
Luckily, for our free time (and perhaps our sanity), mortgage brokers will do all the work on your behalf. With access to various financial institutions and extensive knowledge of the available products, they’re an expert in the field and will know exactly how to help you. When looking for the very best deal, this is the best path to choose.
Of course, there will be some that go directly to their bank and there is nothing wrong with this…as long as you know the right questions to ask. To save a potentially costly error, here is some advice below.
Experience: How much experience does the bank representative have in the industry? How many people have they helped?
Future plans: Do they plan on being in the same position in the future? Otherwise, are they aiming for promotion or do they even have plans to leave the industry? If possible, it’s always best to find a representative that plans to stay where they are because they’ll know your position and will be able to help with any issues you may have in the years ahead. We would never talk badly of representatives fighting for a promotion, but a common complaint from customers is that their representatives move around too frequently.
Different mortgages: Be sure to discuss all the types of mortgages they offer to know more about the different terms and rates.
Collateral and conventional: If you don’t want to be stung by extra charges when changing lenders for a better rate at renewal, make sure you understand the difference between a conventional and collateral mortgage (how the bank registers the mortgage).
Prepayment penalties: How are prepayment penalties calculated? Since you may have to get out of the mortgage before the maturity date, this could be important later in life.
Prepayment privileges: Following on from the previous point, what are the prepayment privileges? We all want to pay down our mortgage as quickly as possible, right?
After your meeting with the bank, it’s time to contact a mortgage broker and you can ask them the exact same questions. All it takes is an hour with each and you will have assessed dozens of reliable mortgage lenders in the industry. With your own meeting with the bank, you can assess the one company and with the broker, they’ll take care of the dozens of others.
From this, there should be no reason you can’t secure the best rates and the best mortgage for your needs.