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| Bank Rates |
Term |
Our Rates |
| 3.90% |
1 |
3.39% |
| 4.05% |
2 |
3.59% |
| 4.85% |
3 |
3.75% |
| 5.59% |
4 |
4.34% |
| 6.10% |
5 |
4.09% |
| 6.70% |
7 |
5.80 % |
| 6.80% |
10 |
5.80 % |
| Posted: 7/6/2010, OAC |
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Take advantage of the lowest interest rates in 30 years!
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Why should I use you, I have a good relationship with the bank?
I thought that brokers are lenders of last resort?
I hear that you charge fees?
I can shop for the best deal myself, why should I use you?
Why are you able to get such good rates?
It sounds too easy; there must be a catch?
Why would the bank offer a better rate through you?
What term should I take?
Is it better to take the cash back or the discount?
I would like to pay my mortgage as fast as possible, what should I do?
When do you charge a fee?
What is the difference between you and the bank?
I have never heard of the lender that you are recommending should we be concerned?
What do brokers do and do other people really use brokers?
I have heard that your mortgages have strange clauses is this true?
Q: Why should I use you, I have a good relationship with the bank?
A: That is great to hear that you have a good relationship with your bank but most people use us because they want someone who represent them not the banks, they want the best interest rate and the best product suited to their needs. Whereby the bank and the person sitting across from you works for the bank and it is their job to get the best deal for the bank. You are limited to the products that your bank offers, which may not be the best products, suited to your needs.
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Q: I thought that brokers are lenders of last resort?
A: That may have been true many years ago, today we are the first choice to consumers who understand what we do. You may not be aware that we represent over 30 lenders and that we place millions of dollars worth of mortgages each year with these lenders. This enables us to negotiate larger discounts based on our volume and pass these savings on to you.
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Q: I hear that you charge fees?
A: Some times we do charge fees but only in rare situations where a borrower would not qualify with a bank. The general rule in determining if we would charge a fee is simple. If you qualify for a mortgage from one of the Major Banks there is no charge. If you do not and we are successful in finding another lender to accept you and this lender does not pay us we may charge a fee. There will be no surprises and if there is a fee we will let you know upfront so that you can decide before we proceed.
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Q: I can shop for the best deal myself, why should I use you?
A: You can do your own shopping, however, we place millions of dollars worth of mortgages yearly and chances are we can get a better deal than someone who negotiate a mortgage once every 5 years on average. We are very knowledgeable about mortgages as this is all we do. Most people don't have the time to spend researching all the different lenders rates, products etc. Shopping for the best deal by you could affect your beacon score. A beacon score is a rating system being used by the banks to determine if a client is a good credit risk. The better the score the better the client. Every time a credit bureau is pulled on you it affects your credit score and reduces your credit worthiness. We have the ability to pull your credit and send it to several lenders without affecting your score. This is another advantage of using our service.
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Q: Why are you able to get such good rates?
A: This is a good question. Firstly, we are able to get great rates because of our volume. We place millions of dollars worth of mortgage annually and we receive discounts based on that volume. Secondly, we are a cheaper source of business for the banks as they only pay us when they accept a mortgage we send them. The branch system is a fixed cost and that is a more expensive way for the banks to generate business compared to using brokers who are a variable cost.
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Q: It sounds too easy; there must be a catch?
A: There is no catch, the banks are very smart people and realize that we can bring them mortgages at a variable cost, which is cheaper that their own branch system. Education has allowed us to get the word out and the knowledgeable borrowers are taking advantage of this service.
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Q: Why would the bank offer a better rate through you?
A: This is a common question. Many banks have branches and the branch system is a very expensive system to operate. Most lenders have closed branches in location where they are not profitable. The reason that they are so expensive is because there is a fixed cost. There are expenses to be paid on a monthly basis (rent, heat and hydro, taxes, salaries, etc.) whether they do any business or not. Compare the fixed cost to a variable cost where they only pay when they accept a mortgage and you can see the advantage of the brokerage system? Banks want our business and the only way that they can earn our business is to offer competitive rates and products.
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Q: What term should I take?
A: Deciding what term to take is a personal question and is based on many variables based such as interest rate trends, income, job stability etc. However, a good rule to use in determining what term you should consider can be based on a couple of factors. If you are in a career where you have great opportunity to increase your income or may come into some money and you have a tolerance for interest rate fluctuations, you should consider a short-term or variable mortgage. If however, you are in a career where the chances of large increase in pay is not likely, or you do not have the ability to absorb a large increase in interest rate and the subsequent increase in mortgage payments, you should consider a long term mortgage (5y, 7yr or 10yr). Most mortgages have generous prepayment privilege as well as portability clauses so that it is possible to pay down the mortgage quickly or move it to another property should you sell. You should discuss this with one of our consultants, they would be happy to advise you.
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Q: Is it better to take the cash back or the discount?
A: The cash back option is a good option but one that you must weight carefully. 3% cash back is equivalent to .75% discount. You then should compare this to what discounts are available and if you can get a 1% discount you are better off taking the discount. If on the other hand you need the cash back for closing cost, renovations or you need to buy new appliances you may be better off to take the cash back. It is best that you discuss this with us prior to making a decision.
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Q: I would like to pay my mortgage as fast as possible, what should I do?
A: Paying off a mortgage is a dream that many Canadians have and it is a good goal to strive towards. However, a better option would be to maximize your RRSP contributions. Once you have done this you can then concentrate on paying down your mortgage. In many instances you can contribute to your RRSP and take your tax refund and apply it to the mortgage as a pre-payment thereby, accomplishing both.
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Q: When do you charge a fee?
A: For the most part we do not charge a fee and in fact in 80% of the cases our service is free because the banks pay us. The odd time we have to charge a fee and this is usually in circumstance where the banks would not consider a client and we would have to find an alternate source. If this were to happen, you would be notified upfront so that there are no surprises and we would only proceed if you agree.
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Q: What is the difference between you and the bank?
A: The bank and their employees work for the bank. They pledge their allegiance to the bank and look after their best interest. We on the other hand work for you the borrower, we pledge our allegiance to you and take your best interest in hand. This does not mean that we take advantage of the banks we simply deal with the banks fairly and honestly.
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Q: I have never heard of the lender that you are recommending should we be concerned?
A: Using a lender that you do not know is not usually a problem as they are lending you the money not the other way around. Most of these lenders only use brokers and do not have to support the very expensive branch system and can afford to be more competitive. If you are still concerned about this and would like to have your mortgage with a major lender, we will only send your request to major lenders.
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Q: What do brokers do and do other people really use brokers?
A: We specialize in Mortgage financing and getting you the best deal. We represent you to the lenders and act on your behalf in negotiating the best deal. In the U.S. 75% of all mortgages are placed by brokers just like us. This figure is quite a bit lower in Canada as we are generally 5-7 years behind the U.S. but things are changing quickly and business has increased by 75% in the past year. This increase is largely due to consumers becoming aware of brokers and the benefits of using a broker.
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Q: I have heard that your mortgages have strange clauses is this true?
A: This is quite humorous and these rumors have been spread by the competition that are afraid of losing business to us. Most of the lenders are very similar with respect to their clauses, prepayment privilege, portability etc. After all, it is a very competitive market and one lender cannot afford to be placed at a disadvantage because of this. In any case you will be notified prior to you accepting a mortgage of any and all clauses to be inserted in the mortgage.
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