7 Lies Mortgage Companies Tell You

Robert Floris and Sean Howard met quite accidentally. What was their common bond? They were both jaded by the financial industry and mortgage companies. Together, they thought “why don’t we wear the white hats and try to help Canadians with our knowledge?”. We hope these articles help you make smarter decisions and better-prepare you to save money.

So…you need money in a hurry and your circumstances do not allow you to go to a regular bank. What do you do? Due to your desperation, you can call these mortgage companies and to your utter surprise, the salesperson says not to worry as they will make it trouble free.

Well not so fast…

If I wrote a book I’m sure it would be a best-seller of all the horror stories that I have experienced over my time as a Mortgage Broker. Below are some of the common lies that I have had the unfortunate experience of witnessing mortgage companies tell their prospective clients.

1. Special Mortgage Rate is Advertised

In today’s Hamilton Spectator, I checked what these 2nd mortgages were being offered by these mortgage companies and here is what I found:

Company 1: Second mortgage from 4.64%
Company 2: Second mortgage promo from 4.99%

Sounds good, doesn’t it? It’s safe to say that 99% of the clients do not receive this rate. If you believe them then you likely believe in the $3 bill as well! These mortgage companies want to advertise this rate in order to get their phones ringing, but in reality, not only will you not get an accurate quote, but it’s safe to say that the actual interest rate will be much higher than anticipated as well.

2. Quote You a Payment but it Changes to a Much Higher Payment

This is just the start. Suddenly the fees and other terms will begin to change as well. This is done in the process since they realize you have a deadline. How do they know this? It usually involves desperate people who have arrangements to pay their tax arrears, owe money, are bankrupt or require emergency repairs.

3. State That it is Easy to Get Out of Contracts

Yes, it is easy to get out of contracts but they tend to not discuss the details with the client. The fees are so high that it would make a great segment on 60 Minutes. One corrupt local ex-company once charged a $20,000 penalty on a $30,000 second mortgage.

4. “There is Nothing We Can Do About the Fees”

Sounds like “it’s not you it’s me”. The real money is in the fees. What can you do to avoid this? Shop around and always get it in writing.

5. Drag on with Documents

The longer they keep you going, the more desperate you become. These predators know you’re in trouble and they keep you going right until the deadline.

6. They Make it “Too Easy” To Get the Money

They will sell you on how easy it is to get money. As long as you have equity in your home, these vultures will lend you the money. However, they do not factor in your ability to pay or whether you have an exit strategy in place.

Below is a photo of an actual advertisement that I came across from a mortgage company. Take a look at the promises they’re making. You’d be a fool to think that this doesn’t come with some sort of costly catch.

7. Bad credit does not matter

It doesn’t? Of course, if you had good credit your financing could be done at a bank. Remember they are predators, they are looking for desperate, naïve clients. One radio ad has a catching phrase: approved. Remember if it is too good to be true, well, you know the rest of it.

Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

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