This was the title of a recent article in the Financial Post by a financial author(presumably some kind of expert)who described how she saved thousands by going from bank to bank negotiating for the best deal she could get.
Her story began over 10 years ago when she bought her first house. She went to Bank A and got a commitment for a 5 year fixed mortgage, then turned around and took it to Bank B, and finally to Bank C. She ended up with a great rate and as very proud of her efforts which were considerable and figured out that she saved thousands of dollars in interest. This however took much time and effort including completing 3 applications and requiring 3 credit inquiries in rapid fire. Two months later she applied for a line of credit and wondered why her credit score had gone down. She didn’t like the rate offered her and so she went to Bank B a week later employing the same strategy as before. She ended up getting refused because of too many recent credit inquiries. Her credit score dropped further.
Three years into the mortgage, she took a job promotion and had to move to another city. The penalty she was told she must pay ended up being over $8,000. Her friendly banker told her ‘not to worry’ because they would give her a new mortgage and the penalty would be absorbed into the new(blended) rate so she would not have to pay it out of pocket. She was unhappy and tried another bank only to find out she could not move to another bank because they could not absorb the penalty. Another credit inquiry had been made.
As years passed, rates dropped substantially to all-time lows. Her fixed rate was not looking as good as it did before. She literallty drooled at the thought of how much she could save if she redid her mortgage, but realized she had no choice but to tough it out until maturity, because otherwise, there would yet again be another sizeable penalty to break her mortgage.
Last year her mortgage matured and she switched to a variable rate mortgage after learning that any penalty would be 3 months interest only. If she had only known that before. Shwe would be giving up the safety of a fixed rate but she felt the risk was now worth it. At the time she received .20 below prime. Now she felt wonderful about the money she would be saving.
We found it ironic that not once did this financial ‘expert’ mention(or consider) going to a professional mortgage consultant. If she had we could have ‘shopped’ for her(using our expertise and clout), with one application to get her the best rate(and product), and one credit check saving her time, money, and not adversely impacting her credit score either. Had she called us, at any point, we would have pointed out the virtues of choosing the variable rate (proven to generate superior interest savings over fixed) saving her thousands in penalties. Lastly, had she dealt with us we would have got her into a mortgage at .75 per cent below prime, saving her big time.
It just goes to show, it’s not all about rate. It’s also very much about the product and the terms, about timing and about getting ‘independent’ expert advice from a pro in the know.