Real Estate

How to "shop around" for best mortgage rate

  • Last Updated:
  • Jun 11th, 2018 2:22 pm
[OP]
Newbie
Oct 8, 2017
3 posts

How to "shop around" for best mortgage rate

I am planning to buy my first house in the near future....have a few questions about the buying process. From my understanding, the pre-approval rate that you get may not be the same as the rate you get when you are actually approved. You may receive a lower rate once your offer on a house is accepted and you are applying for a mortgage.
So, do you apply for a few mortgages after your offer has been accepted by the seller? Would you just contact a few mortgage brokers and ask them the best rate they can give you after your offer on the house is accepted? Are there any penalties if you are already approved from one lender but don't go through with it because you found a lower rate elsewhere? Is there any point in going to multiple brokers for pre-approval?
Also, would pre-approval have a hit on your credit score, and then another hit when you are actually approved?

Thanks.
17 replies
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Feb 2, 2014
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Get pre-approved with your local bank.

Once you have an accepted offer, you can shop around. Currently best rates start at Prime -1.24% 5-year variable and 2.94% 5-year fixed.
Kevin Somnauth, CFA
Mortgage Broker - Mortgage Architects (#10287) and Real Estate Salesperson - Century 21 Innovative
President's Club Award Winner At The Mortgage Architects
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Jan 15, 2017
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LexT05 wrote:
Feb 21st, 2018 10:02 pm
I am planning to buy my first house in the near future....have a few questions about the buying process. From my understanding, the pre-approval rate that you get may not be the same as the rate you get when you are actually approved. You may receive a lower rate once your offer on a house is accepted and you are applying for a mortgage.
Yes, this is true. Pre-approval rates are almost always higher than approval rates unless interest rates take a sudden jump during the time you got pre-approved and the time you actually buy and close.
So, do you apply for a few mortgages after your offer has been accepted by the seller? Would you just contact a few mortgage brokers and ask them the best rate they can give you after your offer on the house is accepted?
Contacting a few mortgage brokers would be the easiest thing to do. Just give them a call and see what they offer.
Are there any penalties if you are already approved from one lender but don't go through with it because you found a lower rate elsewhere?
Generally no, but some mortgage brokers do have representation agreements that will require a penalty should you not go through with it.
Is there any point in going to multiple brokers for pre-approval?
No, just make sure that what you obtain is an actual pre-approval. Some brokers and bankers will simply do a quick calculation based on whatever income you tell them and what debts you have while others will actually request your credit report and provide a more accurate pre-approval. It depends on how strong of an pre-approval that you want.
Also, would pre-approval have a hit on your credit score, and then another hit when you are actually approved?
This will depend upon the time that elapses from your pre-approval to your closing. There can be multiple credit hits during that time. A person who gets a pre-approval today and buys in 2 weeks may not have as many hits as a person who buys 115 days later. Keep in mind that even though the broker, lender, mortgage default insurer may all be requesting your credit report, it should count as one hit on your bureau.
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Apr 10, 2017
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Go with SpinMortgage.com and relax at home. I went with them. Very professional and no fuss.
Newbie
May 31, 2018
3 posts
Hi Everyone,
I have an accepted offer to buy a house. Scotia offered me 2.45 (5 year variable) and I signed the commitment letter and got the final approval. I have few months time until the closing date. Just found HSBC is offering 2.39 5 year variable. Just wonder (1) Am i bound to Scotia now? (2) Can i apply for HSBC and if I get 2.39 variable is it worth the effort?
Thanks
DB
Newbie
May 31, 2018
3 posts
Hi,
Just wonder who is offering prime - 1.24 5 year variable. Scotia offered me 2.45 (5 year variable) and I signed the commitment letter and got the final approval. I have few months time until the closing date. Just found HSBC is offering 2.39 5 year variable. Just wonder (1) Am i bound to Scotia now? (2) Can i apply for HSBC and if I get 2.39 variable is it worth the effort?
Thanks
Deal Addict
Apr 21, 2014
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hello3384 wrote:
Jun 5th, 2018 3:45 pm
Hi,
Just wonder who is offering prime - 1.24 5 year variable. Scotia offered me 2.45 (5 year variable) and I signed the commitment letter and got the final approval. I have few months time until the closing date. Just found HSBC is offering 2.39 5 year variable. Just wonder (1) Am i bound to Scotia now? (2) Can i apply for HSBC and if I get 2.39 variable is it worth the effort?
Thanks
I never go with the big banks. Always go through a broker who have access to non bank lender. I went through a broker and got MCAP. Rates were low, but the big savings is if you have to break your mortgage. If you have a fixed rate which I did the penalty is the higher of 3 months interest or the Interest Rate differential. Big banks play a game with the IRD where they use your posted rate rather than the discounted rate that you got. With MCAP they don’t have posted and discounted rates. Based on the online IRD calculators I am saving almost 20k
Member
May 13, 2007
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What other benefits do you get for not going with the big banks?
abc123yyz wrote:
Jun 5th, 2018 3:56 pm
I never go with the big banks. Always go through a broker who have access to non bank lender. I went through a broker and got MCAP. Rates were low, but the big savings is if you have to break your mortgage. If you have a fixed rate which I did the penalty is the higher of 3 months interest or the Interest Rate differential. Big banks play a game with the IRD where they use your posted rate rather than the discounted rate that you got. With MCAP they don’t have posted and discounted rates. Based on the online IRD calculators I am saving almost 20k
Member
Jan 1, 2009
399 posts
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Goggle wrote:
Jun 5th, 2018 6:47 pm
What other benefits do you get for not going with the big banks?
Usually a lower rate, better terms meaning more bang for your buck. Banks do on the other hand provide convenience if you do all your bank at one of the charter banks and can provide HELOC, brokers will get it eventually
Last edited by Nauth on Jun 5th, 2018 9:36 pm, edited 1 time in total.
Member
Jan 1, 2009
399 posts
95 upvotes
hello3384 wrote:
Jun 5th, 2018 3:45 pm
Hi,
Just wonder who is offering prime - 1.24 5 year variable. Scotia offered me 2.45 (5 year variable) and I signed the commitment letter and got the final approval. I have few months time until the closing date. Just found HSBC is offering 2.39 5 year variable. Just wonder (1) Am i bound to Scotia now? (2) Can i apply for HSBC and if I get 2.39 variable is it worth the effort?
Thanks
Value mortgage is somehow offering that rate, and I don't know he's able to but from me it would be 2.35 variable 5 years it would have to be a high ratio mortgage and the lending value would have to be high
Deal Addict
Apr 21, 2014
2021 posts
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Alberta
Goggle wrote:
Jun 5th, 2018 6:47 pm
What other benefits do you get for not going with the big banks?
Pros
- rates are way better
- calculation of the Penalties is significantly different
- non collateral mortgages

Cons
- can’t get a Heloc through them from my understanding, only traditional mortgage

Equivalent
- both banks and non bank lenders can offer similar terms in regards to prepayment and/or increasing payment etc.
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Feb 2, 2014
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hello3384 wrote:
Jun 5th, 2018 3:43 pm
Hi Everyone,
I have an accepted offer to buy a house. Scotia offered me 2.45 (5 year variable) and I signed the commitment letter and got the final approval. I have few months time until the closing date. Just found HSBC is offering 2.39 5 year variable. Just wonder (1) Am i bound to Scotia now? (2) Can i apply for HSBC and if I get 2.39 variable is it worth the effort?
Thanks
DB
Best rate is Prime -1.29% (2.16%) 5-year variable. You are not committed until funds are released on closing day.
Kevin Somnauth, CFA
Mortgage Broker - Mortgage Architects (#10287) and Real Estate Salesperson - Century 21 Innovative
President's Club Award Winner At The Mortgage Architects
Deal Fanatic
User avatar
Feb 2, 2014
6303 posts
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Toronto
abc123yyz wrote:
Jun 5th, 2018 3:56 pm
I never go with the big banks. Always go through a broker who have access to non bank lender. I went through a broker and got MCAP. Rates were low, but the big savings is if you have to break your mortgage. If you have a fixed rate which I did the penalty is the higher of 3 months interest or the Interest Rate differential. Big banks play a game with the IRD where they use your posted rate rather than the discounted rate that you got. With MCAP they don’t have posted and discounted rates. Based on the online IRD calculators I am saving almost 20k
Well said....
Kevin Somnauth, CFA
Mortgage Broker - Mortgage Architects (#10287) and Real Estate Salesperson - Century 21 Innovative
President's Club Award Winner At The Mortgage Architects
Newbie
May 1, 2016
89 posts
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In a process of buying and getting mortgage:

Question:
- What is current best 5 years fixed interest rate with pre-payment option and accelerated bi-weekly payment? For eg. mortgage amount $100000.00.

CdnRealEstateGuy wrote:
Feb 22nd, 2018 3:20 pm
Get pre-approved with your local bank.

Once you have an accepted offer, you can shop around. Currently best rates start at Prime -1.24% 5-year variable and 2.94% 5-year fixed.

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