23 February 2011
Mortgagelegko: Switching a lender with $100,000 mortgage can often cost you more than you save with the lower rate: don’t forget about lawyer’s commission, appraisal etc.
3. Borrowers who work with a mortgage broker.
“Generally, mortgage brokers can reduce your mortgage rate by 17.5 bps (0,175%)”. In case of a typical $200,000 mortgage you’ll save about $1,670 of interest payments for five years.
Mortgagelegko: Besides, brokers can reduce your search costs, because they work with many lenders and deal only with mortgages. Meanwhile, banks’ “mortgage advisors can’t offer you this, as they work for one lender and try to sell as many products as possible to one client”.
4. Borrowers who cooperate with a lender apart from mortgage.
“The more you are profitable to the bank, the more chances you have to get a better interest rate”.
Mortgagelegko: The deal is that not everyone likes to keep all assets at one bank. And even if you do, it’s often more profitable to contact another lender, because they all have certain credit limits for each client.
5. Borrowers with more equity.
If you put the minimum down (5%, for example) “you’ll pay higher rates than other borrowers – the difference is about 12bps (0,12%)”.
Mortgagelegko: Here we can’t agree with the BoC’s conclusion. If you’re well-qualified and have a stable income, then even in case of 5% down payment we can get you the best mortgage (for example, today it’s a variable mortgage with prime-0,9% or 2,1%).
6. New clients.
“…new clients get larger discounts than existing clients – the difference is about 10bps (0,1%)”.
Mortgagelegko: It can be especially profitable when the renewal time comes. Think about it: you can be a new client for someone.
7. Borrowers who use smaller lenders.
“We came to conclusion that the larger is a bank’s market share, the higher are the rates it offers you.”
8. Financially capable borrowers.
According to the BoC, “…less wealthy borrowers may face greater risks of price discrimination when bargaining in person than they do when acting through a broker.”
Mortgagelegko: Due to our great volume, experience and wide range of mortgage products we offer, even less wealthy borrowers can get the best rates and service.
9. Borrowers with better credit score.
“Financial institutions offer better rates to high credit score consumers”.
Mortgagelegko: From our own experience we can say, that it’s not only the credit score that affects your interest rate – it’s also your credit history and its age.
Of course, you shouldn’t forget that there are many other factors influencing your mortgage rate. Moreover, there are also certain exceptions to the rules we’ve mentioned here. That’s why it’s necessary to understand that this information shouldn’t be used as a blueprint for action.