There’s a very simple way to save serious money on your mortgage. Spending a little bit of time shopping around for the lowest rate today can save thousands over the life of a loan.
Say you borrowed $300,000 and lowered your rate from 2.99% to 2.49% just by shopping around. That’s savings of $1,500 in the first year alone.
The easiest way to shop around is to use a mortgage broker. They deal with dozens of different lenders and always know the best rates offered by each bank. Additionally, aggressive mortgage brokers can "buy down" their rate, which means they take less in commission to offer consumers a better deal.
Be warned, though. Sometimes the lowest rate mortgages can come with restrictions, like a limitation of prepayment privileges. And, somewhat ironically, the lowest rates are often reserved for folks with less than 20% down because the government insures those mortgages.
Another solution is to use online comparison tools to get a good idea at the lowest rates out there, and then asking your current bank to match the best choice. Going with your current bank can save time and paperwork since they already have much of your information on file.
Finally, consider alternatives to the standard five-year fixed-rate product so many Canadians go for. Variable rates are almost always cheaper than fixed, and interest rates aren’t projected to head higher anytime soon. Or, look at a one-year or three-year fixed-rate product, especially if you’re looking at moving before five years are up.
