Online vs. Traditional Mortgages

[AlienSoldier]

I wasen't sure where this fits but was hoping that it would catch the eyes of someone in the industry that can shed some light for me.

What is the difference between mortgages provided by sites such as ratespy and ratehub over those provided by the big banks and credit unions? I was on the ratespy website and they had 5 year fixed mortgages at 1.5% while one of the big banks had a 5 year fixed at 2.19%. That difference is huge!

Is there any benefits or con's to going with an online service? Are they as flexible as traditional mortgage lenders as it pertains to paying off mortgages?

[LANDM]

A mortgage is a standard financial instrument. If the conditions are the same, it literally doesn’t matter where you get it.

However, the differences in rates, even within the same institution, are typically seen with the conditions for repayment.
The lower the rate, the tighter the repayment restrictions typically. That can be restrictions for early termination, lump sum payments, etc.
Rates can also be explained by efficiency and competition, such as online vs. Mortgage broker vs walking into a branch.

[Whyme2]

When it comes to Mortgages you must compare apples to apples. There are so many different products out there that just rate alone isn't always the most important issue. Paying off, remortgaging early, penalties and such.
Consider using a mortgage broker if your searching for or renewing your mortgage and remember no cost to you!

If you like PM me and I can forward you info on someone in Kelowna that was and is fantastic.

[Even Steven]

Banks and credit unions are always higher than other lenders. There are many other lenders on the market (which doesn't mean they're strictly online), and they usually have better rates and better repayment terms. Banks rely on a steady stream of existing clients who are too lazy to look around and end up getting a mortgage from the bank just because they have been banking there for years. Banks never give the best rates.

My advice would be to approach a mortgage broker who has a network of lenders, and who can receive multiple bids for your mortgage from multiple lenders.

[AlienSoldier]

Thanks gents!

I think I will be going through a broker this time. I am also debating paying down my mortgage faster, or taking the money and investing it further. For reference I currently 3.32% for my rate plus I pay an extra 8% on the principal. If it was to go down to 1.7% I could (a) take the difference and invest it in stocks (average return of 7%), (b) pay down the principal with the difference, (c) splurg, (d) further buy real estate or invest in businesses.

[Even Steven]

https://www.ratespy.com/sub-1-mortgage- ... o9Oxngfi7Y


Check it out - mortgage rate under 1%.

[Whyme2]

https://www.ratespy.com/sub-1-mortgage- ... o9Oxngfi7Y


Check it out - mortgage rate under 1%.

Be very Careful and read the fine print. They make it very difficult or nearly impossible to ever let you go in the future without penalties.
It's usually a snag and hold on too forever plan!

[Glacier]

You won't get the advertised lowest rate if you put 20% down because that only applies to those with CMHC coverage. But you will get within half a point of the advertised.

I used the ratehub lowest rate the first time, but switched to a main bank so I could get a HELOC.

[TylerM4]

I've done both (bank vs online).

Here is what I experienced in a nutshell: Online was cheaper, brick and mortar provided better customer service.

To elaborate: Online saved us lots of money, often a full percentage point or more lower than brick and mortar. Day to day transactions were about the same (we've always done most of our banking online anyway). Only time I disliked using online was when we had to do something that "wasn't routine".

For example: Some sort of anti-fraud paperwork the government mandated we complete. Insurance requirement to get a statement from lender showing that we were in good standing.

When the stuff above came up (only once every 2 or 3 years) it was a PITA to work through the online provider to figure out how to get the documents completed. Lots of phone calls, time on hold, and general confusion. With brick and mortar I'd just want into my local branch, hand over the form, and say "I need you guys to sign/complete this".

Overall, we feel the savings are more than worth the extra hassle that comes up every few years and continue to use online.

[jimmy4321]

I've only done broker or bank.
One thing thats come handy for me is the ability to port your mortgage if you have a sweet rate you want to keep, most give 60-90days. With some, penalties can be brutal if you decide to pay out.