Truth about rate sites

Over the past few years mortgage rate sites have been making an appearance online and many consumers are now doing their own ‘rate shopping’ before speaking to their bank or mortgage broker.

These rate sites appear to be making offerings that are significantly lower than what the big banks are offering or even a local mortgage broker. Here are a few points to consider before you commit to one of these online brokers.

1.  Many of these low rate mortgages are ‘no-frills’ or ‘low-frills’ mortgages and are packed with many restrictive conditions and potential land mines. If you commit to one of these products without reading all of the fine print, which most often happens, you could find yourself in a situation that you may find difficult in the near future, meaning sometime in the next three years given that six out of ten Canadian mortgage holders break their mortgage at about the 38 month mark.

2.  Don’t assume that online rates are better than “offline” rates. Your local mortgage broker can shop the market and secure the best deal and also has the products available that are being advertised. We will review all of the pros and cons with you to ensure that the product is the best fit for your circumstances and you can live with the restrictions.

3.  Many online brokers are long distance and if you have a problem with your application it could prove challenging to resolve.

4.  These online brokers work on volume so there could be a disadvantage which is lack of service to you and your mortgage. They are working with many clients at one time and may not provide the personal service that you require.

5.  Don’t apply to too many. For each application you zip through online you generate another inquiry on your credit report. Too many of these could cause a lender to reject you. When you use the services of a local Mortgage broker, only one inquiry is made no matter how many lenders review your application.

 

First-time homebuyers, or people that have limited knowledge about mortgages, are better off consulting a “live” mortgage broker that is close to your area. Someone you can “touch and feel” and most of all trust. 

If you would like a review to make sure a mortgage is a good fit for you please give me a call at 250-826-3543 or email [email protected]

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.