The case for not being loyal to your bank
According to a recent report from CMHC, customer loyalty in mortgage lending is growing:
- 57% of first-time home buyers take their mortgage out from financial institutions they bank with on the regular (Up 11% from 2010)
- 69% of repeat buyers did not change lenders when obtaining their recent mortgage (Up 11% from 2010)
Unfortunately, loyalty does not always pay off. Mortgage customers who remain loyal to their lenders have been found to “shop around” the least, which means they may not always be getting the best mortgage rate due to their (misplaced) confidence that their bank is providing the best rate possible. Out of convenience, many borrowers sign renewal letters with whatever rate is offered to them by their existing lender. For first-time home buyers, dipping into home ownership is unfamiliar territory, so opting to sign with your daily bank provider keeps the unfamiliarity to a minimum. But in reality, you are doing yourself a disservice by not broadening your scope.
How can a Canadian mortgage broker help you? Let us count the ways.
A mortgage broker is FREE
Despite what you might have heard, consulting with a mortgage broker is totally free, whether you fill out an application or not. A broker earns income by charging the lender a referral fee once they close a deal. This means that for you, the borrower, a broker’s service is cost-free.
A mortgage broker can shop around and negotiate for you
It is a little known fact that mortgage brokers have partnerships with a wide range of lenders, including banks. They compare mortgage rates and products, which means they can be your one-stop shop for the best mortgage rate. Using a broker’s services helps you save time and money.
A mortgage broker has broad knowledge of the mortgage industry
A mortgage specialist at a bank will only be able to inform you of their own line of mortgage products. It is unlikely that they will be able to give you a comprehensive and unbiased view of the current market and any special offers that exist. Brokers are not limited to one mortgage source. With this advantage, they gain a broader scope of what is truly available for you.
Using a mortgage broker can protect your credit score.
If you try to do a little comparison shopping yourself, chances are that each lender will pull a copy of your credit score, which actually affects your credit score. However, a mortgage broker will acquire your credit score once and use that for multiple lenders.
Save time
With hectic schedules that include demanding careers and a growing family, time is precious. This is another reason why customers rely on their banks. When the time comes for renewal it seems easiest to just sign the renewal offer from your existing lender; however, convenience could end up costing you thousands of dollars. The best decision you make would be to compare Ontario mortgage rates. Mortgage broker services provide a reliable alternative to performing your own mortgage hunting- a process that can be frustrating and time-consuming.
Unfortunately, banks are making a tidy profit off customer loyalty. They bank on your returning service (pun intended) and trust that you won’t look around once your term comes to a close. There are a number of great lenders that offer low mortgage rates and a mortgage broker is the best way to access them, free-of charge.
