In July the Bank of Canada Benchmark interest rate  increased to 1.5% from 1.25% which has lead to many inquiries and questions from clients about mortgages. This increase marks the fourth increase in the last 12 months. Although uncontrollable political topics and economic predictions are the basis of why increases occur, ensuring you get the best terms and conditions for your mortgages is important.

I always get asked “What is a better choice for my mortgage? My bank or going to a mortgage broker?” When getting a new mortgage, re-financing or when their mortgage is up for renewal there are many factors to consider. It is impossible to outline all of the components that go into making the best choice in one article so we will mention a few key components to consider.

Mortgage Brokers make up 55% of the mortgage financing market and banks take the remaining 45%. Mortgage brokers focus solely on helping clients with their mortgage while this is only one component of the many other things that banks focus on. Mortgage brokers work with many different lenders (sometimes up to 40), and lenders who specialize in different things to get the best rates and mortgage terms. For example, investors with several properties would be more successful using a mortgage broker who can shop around to different lenders versus a bank who is only able to provide the products their institution offers.

Mortgage brokers are able to use one credit check to apply to several different lenders. With a bank if they are not able to provide you with mortgage terms you are happy with you will have to start from scratch with another lender, including running your credit again. Both the bank and mortgage brokers do not usually charge anything to clients using their services as they are paid directly by the lender.

Compared to traveling, if you go to one airline kiosk and purchase a ticket directly from them they may not be able to offer you as good of a flight or price as a travel agent who has approached all the airlines to negotiate the best possible price and extras. Brokers also stay on top of your mortgage during the term to make sure that if there are any changes your mortgage is still the best option for you. When bank practices/ policies change and clients buy another home they may be unable to obtain financing from their current bank and are forced to go elsewhere and left to pay high mortgage breakage fees.

Please contact me I would be happy to give you key questions to ask regarding your mortgage!

A glimpse of the Canadian housing market

  • Canada’s home ownership percentage remains high at 64%
  • 82% believe owning a house of a condo is a good investment
  • Number of months inventory is available at the current sales pace is 5.7
  • National average sales price in Spring 2018 is $496,084 (to increase in 2019)