• How do I know for sure that I have secured the absolute best mortgage rate?

    Short answer: never.

    It’s like when you buy something at a flea market. How do you know for sure that you have negotiated the absolute best price? You probably don’t know how much the seller paid for it, and even if you did, the seller likely has some overhead costs or expects that it has appreciated or it has sentimental value or he/she just wants to make a certain profit. The seller may give you their bottom line, but that bottom line can vary from their cost (so they break even) to some profit that they are willing to accept.

    How does that translate to mortgages?

    Well, first it depends on the type of mortgage. Are you an “A” client? (Example: good credit, good income, good down payment etc.) Are you a “B” client? (Example: bad credit, undesirable location, insufficient income etc.) The more “wrinkly” the deal, the higher the risk, and generally the less profit for the bank and/or mortgage broker. In some cases, the deal is so wrinkly, the bank doesn’t pay the mortgage broker at all. In those exceptional cases, a separate brokerage fee may be charged.

    How low can you go?

    When you get a mortgage with a bank, the bank makes money on the interest, and usually pays the mortgage broker a “finder’s fee” for structuring the mortgage, doing the administration, doing all the paperwork. The broker can usually forego their fee in exchange for a lower rate TO AN EXTENT. There is a limit on how far the bank will allow this. Some brokers jump directly to that low and make their money on volume. But beware, sometimes that volume comes at a cost of service. They can only spread themselves out so thinly before you get to the point where the customer service may suffer. They can also put catches on the mortgage like huge penalties that will secure their profits. The lender can usually drop the rate on their side as well. The extent to which this can happen is also limited. Generally, this depends on how much money they’re going to make off of you. That is, the bigger the mortgage, the more generous they can be.

    So what can you do?

    Do your own research. Search the internet for rates. Talk to different brokers and banks. Ask why you do or don’t qualify for those rates. Ask for the fine print.

    Just when you thought you were safe…

    If a mortgage broker negotiates the absolute lowest rate for you with the bank and foregoes all or most of their payment (i.e. works for free or almost free), then you know you have the best rate. But maybe there is another bank that can better? And what kind of service would you expect from someone working for free?

    It comes down to trust and service.

    There are many circumstances where we do work for free. We help thousands of clients to negotiate a better rate with their own bank. For free. When we help our clients port mortgages, we do so. For free. When we give our clients advice on how to become mortgage free or avoid getting a mortgage altogether (sometimes they just need a line of credit). This is done for free.

    Our difference?

    Whether we are working for free or getting paid, the service level does not differ. We treat all of our clients with the same respect, courtesy, and care.

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