Friday, May 6, 2011

How to get better mortgage rate?

A good friend of mine asked whether I knew how to get better mortgage rates. Here is what I did when I applied for mortgages.

I usually call couple of banks and couple of mortgage brokers and get a quote. I  was up front and told them that I was shopping around. I don’t provide any personal details for them to make an application or do a credit check But give them the mortgage amount and ask what would be their best rate and terms of the mortgage (prepayment limits, penalty calculation for breaking the mortgage).  There will be some who would say that they can’t give you exact without the application, I exclude them because there are plenty of choices in the market.  I also read the forums to find more information.

Here are few tips I have found:

  • You can get a mortgage even from a bank branch in a different town. When I bought my first home I found from my sister that a Scotia bank branch in different town was offering better rate. I spoke to the officer faxed application form and she sent the documents to a branch in my town to sign the documents.

  • When I bought my current house, I found a broker who said he will the beat the rates offered by any other bank. But I made a better deal with him because my sister and I bought new houses at the same time. So I asked him to give better deal since he will be getting commissions on two mortgages. We both applied separately and got our approvals separately but we got better rate. So if you have a family member or friend looking for a mortgage at the same time you may be able to negotiate better rate with your mortgage broker.
  • When it was time to renew the mortgage again, I found that I can actually have mortgage under the secured line of credit. That means no application, no discharge fee etc. I currently have my mortgage at TD bank under secured TD line of credit at 2.45 %  even though my line of credit interest rate is prime+1%.

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LifeAndMyFinances said...

Thanks for the tips! We're currently looking for a house too, and this is good stuff to know!

Vasko said...

Being a mortgage broker I just want to explain why some brokers don't offer quotes over the phone.

By just saying "our best rate is 3.0%" for example, a broker would mislead you, because you may not qualify for it; or you may qualify for even a better rate depending on other factors like the amount of the mortgage or the timing of your closing.

Brokers, who request an application in order to give an accurate answer are actually the better ones. They take their responsibilies seriosly and want to do the job in a professional way.

And, remember, making an application with mortgage broker is only a benefit to you, because that application is good for most banks, credit unions, trust companies and other lending institutions. If you were planning to go to TD for a quote, just tell you broker that you prefer to deal with TD and he/she would be happy to get you the best rate that TD offers at that time.

Visit for more on how brokers work and how you can benefit from them.

A.N.Rajah said...

Vasko- Thanks for the comment. You have a good point. But I have also had brokers who gave me an quote and indicated theconditions for qualfying for that rate. All I wanted is to get rought estimate without wasting their time and my time. Ofcourse I did not want them to do credit check if I am not applying for it.

Home Mortgage Rate said...

Hello Dude,

Buying a home is one of the biggest and most important financial decisions any of us will undertake in our lifetimes. Getting best mortgage rates are the topmost factor on everyone's mind while applying for a home loan. It may vary depending on the type of loan and the duration of the loan. Thanks a lot for sharing with us...

Randy Robinson said...

Also, in order to get a better mortgage rate, you should try to improve your credit score and report first. To do that, you should pay bills on time and keep the account in a steady manner.

David from said...

Borrowers with higher credit scores can certainly get a mortgage at a much favorable rate and term than those with poor rating. Such variations can potentially save you thousands of dollars over the full term of your loan. Besides, it's getting harder for potential home buyers to get a loan nowadays if you don’t have a strong credit score.