The lowest rate isn't always saving you the most money.
The lowest rate is not always the best product for you
In the world of mortgages everyone cares about the rates. That seems to be all people talk about. There is a lot more to it for us professionals but the average consumer is brainwashed to care only about the rate, often diverting focus from important options like prepayment privileges and details about fees.
2.36% vs. 2.46% vs 2.56%
Here are the actual payment numbers. A $400, 000 mortgage with a 25 year amortization at a fixed interest rate of 2.36% will cost you $1764 per month. The same mortgage at a rate of 2.46% will cost you $1784 per month. At a rate of 2.56% your monthly payment would be $1804. While there is a varying difference in these payments, it is not as significant as having to pay $11,000 to break a mortgage that you did not realize was a collateral product.
Don't ignore the fine print
Getting the lowest rate will always save you money in interest over the life of the mortgage. However, we always encourage our clients to read all the fine print. If something sounds to good to be true than it probably is. Some of the lowest rates we offer have big catches. If they work for you then great, you win a record low rate. If the catches don't work for you such a product can end up costing you a lot in the long run.
If it seems too good to be true it probably is
We recently saw an extremely low mortgage rate offered by a large lender, to us it looked to good to be true so we called them up and asked to see the details. One of the clauses in the fine print was that the low rate was only offered to individuals new to that lender who transferred $100000 worth of assets to that bank in conjunction with their mortgage (eg. RRSPs, credit cards, LOC, etc). If you calculated the fees to transfer these products and open accounts with that lender that it was easy to see that the low rate was not a good deal at all and would cost our clients A LOT of money.
Let us help you
This is why as a Mortgage Agent my role is not only to find you the best rate but also to ensure there is no fine print attached to it that will end up costing you a lot in the long run. We look at the entire picture when helping you select the best product, not just the rate number.