What To Be Wary Of When Shopping For Rates Online
When shopping for mortgage rates online in Canada, it’s essential to be aware of several factors to ensure that you’re getting accurate information and making informed decisions. Just like anything else, sometimes you get what you pay for so here’s what to be wary of and consider when you see those very low rates.
1. Does the interest rate you are seeing apply to your situation? Mortgage rates are not black and white where one rate applies to all types of situations. In fact they are far from it. Mortgage rates are not only based on credit and the strength of the file, but also how much down payment or equity is in the property, how long your amortization period is and whether it is an insured/insurable or uninsured mortgage. Also is it the term you are looking for or the type of rate you are comfortable with? There is so much to consider when it comes to what rate applies to you so the advertised rate you are seeing (which of course will be their lowest rate offered under any conditions) may not be what you are qualified or looking for.
2. Beware of rate shopping by going from bank to bank. It is not possible for any mortgage professional to give a rate that you can qualify for without doing a credit check, since it plays a critical part in the rate you get as mentioned above. If you are going bank to bank to find out the rate that applies to you and they are doing a credit check each time, this will hurt your credit and bring your score down at a time when it’s very important to keep it in good standing. With a Mortgage Agent we do one credit check to shop across all lenders including big banks.
3. Watch out for the fine print. When advertising it is common for any company to advertise their lowest price to try and “get you in the door”, but did you know that lowest price might come at a cost for your mortgage? Mortgages can be the same as anything else and you can get what you pay for. Certain mortgage products might be at a lower rate, but you may not be able to refinance during your term if needed, port your mortgage if you want to move and even in some circumstances to sell your house to get out of the mortgage. Other products do not allow you to pre-pay your mortgage faster if you wanted to so it’s wise to know the flexibilities and inflexibilities about your mortgage. If you have your eyes on a really low rate that nobody else comes near, beware there may be more to it in the fine print that could cost you more in the long run. The lack of flexibility of these mortgages may certainly come at a cost that is not worth the low rate you see.
4. Beware of introductory rates. They are out there and they can be costly. Introductory rates may look nice for the first few months, but should you need to renew your mortgage after the introductory period it may be at a higher rate than most lenders for the rest of your term or the lender will charge a fee if you go elsewhere. If you decide to pay out the mortgage instead they may then charge you a fee.
Keep in mind when shopping for mortgage rates, banks like any other business are in the business to make money. If you feel you’re getting a really good deal on a rate, just be wary. Speaking with a trusted Mortgage Agent can be helpful as they should be aware of the different mortgage products and rates available, which rates are truly a “good rate” and which products may have fine print you may not be happy with. At the very least they should be able to bring to your attention the fine print and you can make your own informed decision.
Jennine Hadfield