Whether you are looking to buy your first home as a First-Time Home Buyer, are New to Canada, refinance, or renew your mortgage, getting the best mortgage rate from your mortgage lender could save you thousands of dollars. Most borrowers trust that their financial institution offers the best rate, but depending on the source and cost of your lender’s funding, some mortgage lenders’ rates are higher than others. We aim to show why getting the best mortgage rate is important for a borrower.
Getting your first mortgage
As a borrower, especially if you are buying your first home, you always look for a rate that fits your budget to afford your mortgage and maintain your lifestyle comfortably. So it is no wonder that when borrowers are buying a home, they spend a lot of time researching the right mortgage and the lowest rate, getting a mortgage pre-approval for as long as possible so they can take the time they need to get the right house and not overpay on the purchase price.
Renewing your mortgage
At renewal, over 60% of borrowers sign their renewal document from their mortgage lender without researching their renewal options and end up paying more than if they had contacted a mortgage agent who offers a free service and has access to multiple lenders, including three of the big five banks in Canada.
A mortgage agent will have access to lower rates than your bank from lenders with the same regulations and protections that a bank offers.
How much can you save with the best mortgage rate?
Mortgage rates are constantly changing, and monitoring rates is a full-time job, so using a mortgage agent to assist with a mortgage could save you thousands of dollars over a five-year mortgage term. Here is how: Let’s say you got a mortgage approval and the rate was 5.09%, you have signed the commitment, instructions have been sent to the lawyer, and you are waiting to close. Three days before closing, the rate drops to 4.99%; your mortgage agent or broker will request a new commitment with the new rate so you can take advantage of the savings.
Let’s illustrate how much a borrower can save. Assuming they buy a home for $800,000 with a 10% down payment. They are considering a 5-year fixed-rate mortgage. Let’s also assume that before getting a mortgage, they compare mortgage rates from one of the Big Five lenders (which Sunlite Mortgage also represents). The Big Five lender offers a five-year fixed rate mortgage amortized over 25 years for 5.14%, and Sunlite Mortgage, the same five-year fixed rate mortgage amortized over twenty-five years, provides a rate as low as 4.69% from another A lender.
