• Pros and Cons of Using RatehubPros and Cons of Using Ratehub

    At Mortgage Architects, we try to teach our clients about important topics including:

    • budgets
    • cash flow
    • amortization
    • mortgage insurance
    • mortgage protection insurance
    • etc.

    But most importantly, we discuss mortgage in the context of family and quality of life. We believe that you should not sacrifice your marriage, family, health, children to pay down an appreciating asset like a home. Inevitably, our clients will fixate on rates and quote online mortgage interest rates from sites like Ratehub. It is important to discuss the Pros and Cons of Using Ratehub.

    Is Ratehub Useful?

    Yes. When discussing the Pros and Cons of Ratehub, we would be dishonest and we would be doing our clients a disservice if we said that Ratehub was not useful. Why? Ratehub gathers together a bunch of people or businesses who sell mortgages and they compete with each other (for a fee of course). How do they compete? Mortgage rates. Let’s be honest. It’s right in the name: Ratehub. It’s the only way they can get your attention. They set a reference point for the client; an ideal target, if you will. A rate that may be reached under very specific circumstances.

    The Problem With Ratehub

    When considering the Pros and Cons of Using Ratehub, we need to talk about the big catch. It is something known as the “bait & switch” in our industry. What is the bait & switch? That’s when somebody waves a carrot in front of you and when you take the bait, you find out that you are actually only entitled to a brussel sprout (assuming you don’t like brussel sprouts)! For example, they will offer you a rate of 1.4%. All you need to do is qualify for it. After you call them and they do their sales pitch on you, you find out that in order to qualify for the 1.4% rate:

    1. You need to be purchasing a home. Ok…that’s fair.
    2. You need to put less than 20% down. Ok…but you wanted to put 20%.
    3. You need pay thousands of dollars out of pocket for the bank to insure the loan, thereby protecting the bank’s investment. But don’t worry – they will add the majority of that cost to the mortgage. Ok…no so fair anymore.
    4. You have no freedom to pay off the mortgage more quickly than agreed. Ok…I don’t intend to get any raises in the next 5 years anyway.
    5. You can’t exit the mortgage contract even if you wanted to pay a penalty unless you sell your home. Ok…I’ll sell it to a family member.
    6. ¬†You can’t sell it to a family member – you need to sell it to an “arm’s length third party”.
    7. And the list goes on…..

    So what do you end up doing?

    You take the 1.7% rate that doesn’t have all these catches. Pros and Cons of Ratehub? Be careful of the cons because in that scenario above, let’s summarize what happened:

    1. The mortgage broker paid to advertise on Ratehub.
    2. They advertised a rate that is realistically unattainable (or unpalatable). BAIT
    3. They got you to call them.
    4. They explained why you don’t want or can’t get that rate and sell you on a different one. SWITCH

    BAIT & SWITCH

    The moral of this story is that when weighing the Pros and Cons of Using Ratehub, go to their site. Check what is available to get the lay of the land. But please get a second opinion from a broker that you trust. Because in that scenario above, sometimes the broker doesn’t complete the last step: SWITCH, and you get stuck with an inflexible product which can be worse than the SWITCH itself!!

    Robert Floris is a Mortgage Broker. His office is located at 236 Pritchard Rd, Hamilton, ON L8W 3P7. If you would like to speak with Robert, he can be reached at 1-855-55-TRUST (87878). Alternatively, you can contact Robert here.

    If you would like to apply for a mortgage online, please followthis link.

    If you would like to see our Google reviews or leave one yourself, you can do so here.

    Thanks for reading!

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