Best Canadian Mortgage Rates?

Don't expect to get the best Canadian mortgage rates when you walk into your local bank branch. There are a couple of strategies that could help you.

First, understand the different channels that lenders use to generate mortgage leads and mortgage business:

It is possible to apply for a mortgage with individuals from each of these. The next step is to understand the motivations and experience of these different channels. Let's assume that you are not working with someone that has more than 18 months of experience in their job.

Local Branch

The local bank branch staff can help you to arrange a mortgage. They are also available to help with opening bank accounts, investments, RRSP's, TFSA's, Mutual Funds and a bunch of other stuff! In other words, these people are generalists.

The branch staff are generally compensated with salary and bonuses. The bonuses are based on their sales of products and the pricing (i.e. the discounts) that they give their clients.

The more products they sell to each client, the better pricing/discounts that could be offered to clients.

For example, 2 separate clients (James & Jennifer) are looking to purchase their first home for $350,000 with 5% down. They each go to Sally to arrange the mortgage.

James meets with Sally and she opens the following products for James:

  • New Account with a banking plan
  • New TFSA Account
  • New RRSP Account
  • Consolidation loan for some of his credit card debts
  • Life Insurance & Disability &/or Critical Illness for the mortgage

Jennifer meets with Sally and she opens the following products for Jennifer:

  • New Account without a banking plan
  • Jennifer doesn't open a TFSA Account
  • Jennifer doesn't open an RRSP Account
  • Jennifer's credit cards are low interest, therefore she doesn't need to consolidate her credit card debts
  • Jennifer has a Financial Planner who has already set up Life Insurance & Disability & Critical Illness for her

James received an interest rate much lower than Jennifer did! Sally sold James many more products and received more credit for these sales. Sally was therefore able to provide James a better rate for the mortgage.

The best strategy to negotiate the Best Canadian Mortgage Rates when dealing with the local branch is to buy more products with them.

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Telephone Banking

If your first contact with your lender is through their telephone banking channel or their online banking centre. They will help you to a certain point. In general, they will take your information, and get you pre-approved for the mortgage.

Beyond the pre-approval, they will refer you to the local branch to finalize everything. Sometimes you can negotiate a better rate with them, but not always.

Once you are referred to the local branch, you can negotiate the mortgage interest rate with them. The same strategy applies as above. The more products you choose/purchase with the branch rep, the better the discount you can negotiate...

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Mortgage Specialists

Many lenders have a captive sales force. These individuals only sell mortgages for the lender that they work for. They typically have more experience and expertise dealing with mortgages. They can help clients who have more complicated requirements.

Mortgage specialists are typically compensated by commission and volume bonuses. Some specialists will also have a small salary component. Their commission is structured to pay them based on the discount offered. The greater the discount, the lower their commission.

Mortgage specialists develop relationships with realtors, builder sales reps and a few local branches. Most of their business is referral based, from these sources.

Because of the referral relationships that mortgage specialists have, they will generally offer their clients better rates than are available through the branch network.

Sometimes, it is possible to negotiate these rates a little further. These negotiations would then look similar to a branch negotiation. The more business you are willing to bring over to this lender, or the more products that you already have with this lender the better deal you might be able to get.

They will generally need some confirmation that the rate you are requesting is available elsewhere. Most of the time, these lenders don't want to be the lowest rate quoted in the market.

What are the best Canadian Mortgage Rates? Complete a Quick App and receive current rate info!

Mortgage Brokers

A mortgage broker is independant. He will earn a referral fee (commission) paid by the lender to him based on business that is referred. Most lenders have a very similar structure for paying mortgage brokers.

In some cases, if a client has bad credit and don't qualify with an "A" lender the mortgage broker will source the mortgage funds from a "B" lender. In these cases, the mortgage broker will charge the client a fee for this service.

The mortgage broker works with banks that offer many services including mortgages. The mortgage broker also works with lenders that only deal in mortgages. Therefore, they work with lenders who are offering the best Canadian mortgage rates.

Because the mortgage broker is independant, he can refer clients to many different lenders. Each lenders have different product and offer different advantages & disadvantages. Each lender also offers different rates with different terms and conditions.

This helps the broker to fit the client with the best canadian mortgage rates that fit the client's individual needs.

Some lenders will offer mortgage brokers better rates based on the volume of business referred. There could be a 0.10% to 0.40% difference in the rates offered to brokers by certain lenders depending on the volume referred.

In general, a mortgage broker will offer client's better rates because the lenders are competing for the client. The mortgage broker can further negotiate better pricing from the lenders based on the volume of business & referrals that they send to the lenders they work with.

What are the best Canadian Mortgage Rates? Complete a Quick App and receive current rate info!

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