Frequently Asked Questions About Rates

One of the toughest things about mortgage planning is filtering out misconceptions about the process. Below are a few of the questions about rates that I get most often. If you're interested in where mortgages came from, feel free to mosey on over to my Mortgage History 101 page.

Can you guarantee me the lowest rate?

I wish I could - I really do! Most lenders (e.g. banks, credit unions) set their rates based on what's called the Prime Rate - this, in turn, is set by the Bank of Canada. Even though lenders use the Prime Rate as the baseline, they can also decide at any time to have company-specific promotions - and these vary from week to week. Every time I look at a case, I always look for the lowest rates available; the reason I can't guarantee a rate is because:

1. The rate is set by the lender.
2. The rate is conditional on a set of stringent requirements set by the lender. It's not until every single requirement is met that the lender will give what's called a conditional approval.
3. The mortgage process can take time and, unless we're already very far along the line, the same lender may have moved onto another promotion by the time everything is ready! This is why it's important to work with your mortgage consultant and let them know when unforeseen changes come up - the earlier you let us know, the better deal we can find for you.

How do I lock in my rate?

A lot of lenders, banks included, use this as an advertising strategy: "Come in today to lock-in your rate!" This opens us up for misconceptions that there is a magic button we can press to lock it in for you (spoiler: this button doesn't exist). However, there is a point in the process in which we can lock it in - and that's called a conditional approval. Once all the necessary documents have been collected and verified, it's my job to find you the most competitive deal among our collection of lenders. After we have them fight tooth and nail for your business, we send your file to that lender for review. If the lender is happy with the application we put together, they can issue a letter stating all of the outstanding conditions that must be satisfied (there's a lot) - plus the rate that they will and have to offer upon acceptance. This is why it's critical to work closely with your mortgage consultant so they have everything on hand by the time a good deal rolls around - and they can help you hit the ground running.

How do I know you won't change the rate on me?

First off - ouch, that you would think that - but secondly, I can't! There's a misconception out there that we're somehow paid by making your mortgage more expensive - NO! Full disclosure that yes, mortgage professionals can charge their clients on top of what the lender pays us, but we frown on that practice because it's dishonest. Despite needing to do a lot of legwork to get a deal done, the commission that the lender (not you) pays us is clearly printed on the final package you have to sign off on and you will find that it is more than proportional to the amount of work required to make sure it goes through. There are cases in which traditional lending won't cut it for a client's situation - but even in that case, the rate and fee is mutually agreed upon and it should not feel like it was sprung on you. If you haven't already read my story, click here to see why this is a personal pet peeve of mine.

Is there any reason I wouldn't want the lowest rate?

Oddly enough, yes! As a prudent consumer myself, this took some time to wrap my head around; before entering the industry, I thought for sure that the rate would be the most important thing when it comes to getting a mortgage. Here's an example:

Let's say that Suzy is shopping for a condo and is looking for a mortgage. Lender A down the street is offering a mortgage rate of 3% and it's the lowest one the internet forums can find. Should she take it?

Her friend, Jim, is looking at a similar condo but the difference is that he tells his mortgage planner that he has car and credit card payments - at 6% and 20% interest rates respectively. The mortgage planner finds a deal from Lender B for 4%.

When Suzy and Jim meet for coffee, they compare notes. Who found the better deal? It really depends on their situation! If the mortgage planner was able to lump Jim's high-interest payments into the mortgage, it could mean a lower monthly payment for Jim despite the mortgage rate being higher. If Jim's biggest concern was monthly cashflow, it could be a more suitable solution for him.

What are your rates?

Because we have access to so many lenders, including big banks, we can only publicly list the going market rate across the board. However, there are often unlisted promotions that can match or beat even top-tier bank rates so don't hesitate to drop me a line if you have any questions. No sales BS and no pressure - just the honest truth! The more you're open to share, the more accurate my analysis can be. Below are some of the current going rates.