Consumers should know that websites which allow advertisers (brokers or lenders) in most cases “does not” mean you are getting the best rate. In fact, almost all of these sites don’t use any special technology or system to scan your area, province, or country for the “best rate”. In fact, what they do is allow brokers and lenders to pay for advertising, often in a bid system, to post their lowest rate. That is why you see the same names pop up over and over again.
This is also why you see a company with the best rate one day, and totally absent the next. It is not because the company has “suddenly” become non-competitive. It is because they chose to cease or suspend advertising for one reason or another.
Therefore, what you are seeing is not the best rates. Rather, you are seeing rates from companies which invest heavily into advertising on these sites to capture leads.
If you were truly seeing “best rates”, what you would have is a “ticker” type system which kept live feeds, or even periodic feeds (such as end of day) from all the mortgage lenders in your area, province or even country. Whether your deal is not available for your situation, your closing date, your area, or if they are simply using a “bait and switch” strategy, you may not necessarily be receiving the best rate.
You should not be shopping for your mortgage merely from a best rate perspective regardless. There are many factors to consider outside of rates and assuming you are aware of market rates, you should feel comfortable in shopping and arranging your mortgage with a trusted source.
The advertisers on these sites will pay for “clicks” and pay for actual submissions. By submitting your information to these types of websites you are really submitting your information to a company who provides your information to third party mortgage companies who will pay them for your information and lead. Although it is in your best interest to obtain the best rates, terms and conditions for your mortgage, it is in their best interests to cover the cost of their advertising and earn more fees. The ultimate lender of choice for your transaction may not necessarily be the lender that offered you that “amazing rate”.
Use a mortgage professional/company that comes highly recommended or someone you feel you can trust to provide you with the best options for your situation. It’s a given that Mortgage Brokers understand that you are looking for the best rate possible. That is their mandate and they know they are competing on your behalf against all the lenders and options available. A knowledgeable mortgage broker who is highly respected and experienced can get you a great deal, without any of the tactics that are engaged by some of these so called “independent” websites. These sites are designed for mortgage brokers to capture more business, not for the consumer looking for the best mortgage, even though the optics may seem otherwise.
A good mortgage broker will match your needs and requirements to mortgage program that suits. Instead of being fascinated with extremely low interest internet advertising, work with a Mortgage Broker that is upfront and honest and not randomly quote interest rates until they know your full situation.
Until you see a site that has virtually every Canadian lender posting their rates that is updated in real time, beware. You are not seeing the best rates in the market. Rather you are seeing a way for a few brokers and lenders to capture more leads through the internet.
Very often when shopping around, people ask “What is Your Rate”. There is no “One Rate Fits All” out there, as there are so many pieces to the puzzle that are factored in when the lender is determining the rate.
Many people find out too late in the process that the original rate that was quoted is no longer available, and this could be for a variety of reasons.
These reasons may include that the rates changed and they were not locked in, that the loan-to-value is higher because the appraisal came in for less than the borrower thought their home was worth, or that they don’t qualify for the original rate that was quoted because the mortgage professional did not have all of the facts yet.
Very often when an individual shopping for a mortgage fills out on online inquiry or are trying to allow the “Lender to Compete”, they ultimately end up going with whomever quoted them the lowest rate, only to find out later, after spending lots of time and money that they do not qualify for this rate, and can only close on their loan if they agree to a higher rate.
It is important to reveal everything to the mortgage broker or banker early on in the process so that things don’t change later on.
I am not totally against advertising for capturing leads. After all, we are in the internet age and many of us use the internet for most of our shopping and information. What I am against is the optics and perception of these “best rate” sites. They are simply advertising sites. They do not in any way provide consumers with the best rates, terms or conditions. What they provide is the best rates on very specific, usually modified products, from mortgage brokers or lenders who choose to advertise on these sites. This is a select few from the many fabulous mortgage brokers and lenders in the industry who at any given time, may have rates, terms and conditions that are even more favorable that what you are seeing.
Have any questions, need any advice? Visit us at www.thefinancialforum.ca. Email us at mortgages@thefinancialforum.ca. Call us at (905) 265-0246.
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