5 Reasons to Avoid Big Bank Mortgages

In Canada, there are few things guaranteed. Snow. Taxes. Roll up the Rim to Win.

Wearing out your snow shovel...

We want guarantees. We need them. So when we want that feeling of security that only home ownership provides we turn to the first thing that we think may be able to help us financially; our parents.

But what if you are past that stage of wanting/needing parental assistance? Your second choice is most likely your financial institution. After all, you've been with them probably ever since your parents set you up with your first bank account in a perhaps misguided attempt to teach you about savings and earning interest.

I know that's where I started. I was told that the banks will 'give me money on the money i give them'. It was called interest. So every once in awhile my folks would take me to the local bank and I would give the teller my bankbook and some birthday money from Gramma and the teller would take my money and give me the book back. Inside it were numbers; my previous balance, the money the bank gave me for keeping it there, my deposit and then finally my new total.

The one time i remember registering how much my bank was giving me it was 11 cents. I probably had not been in there for a few months. I remember thinking 11 cents isn't very much. Fast forward 30+ years and I'm still wondering when I'm going to be getting paid for giving my money to the bank to hold for me so that robbers wouldn't get it.

I digress. You are a grown up now and want to buy a house. You need a mortgage because you don't have $400,000 built up from the interest you have earned from your bank. So, after your parents say no, you decide to go to the only place you know that deals with big amounts of money; your bank.

Is that your smartest choice?

What's the Big Deal? A Baseball Analogy of the Latest Interest Rate Hike.

(Disclaimer; I am not a mathematician nor to I like baseball, however I am a certified mortgage broker and have played slow pitch a few times so that makes me super-qualified to write this post)

Recently, most of the Big 6 Canadian financial institutions announced a slight rise in their interest rates. Most of Canada didn't know about this rate increase because A) it was pretty small, only 1/5 of 1%   B) it's the middle of August when most of Canada is still in Summer vacation mode and who the hell cares C) the CFL and MLB is in full swing and who the hell cares D) you already have a mortgage and don't want to think about it for a few more years but should care.

Granted, 1/5 of a percent isn't much to get excited about. It's like that guy on 1st taking a step off  the base. Maybe he's getting ready to steal second, maybe not. It's pretty far to second. Nobody gets too excited about one little step off the base, right? Canadians have other things to do other than think of real estate.

Canadian Real Estate; (l to r) bank rates, Canada's Minister of Finance, Bank of Canada

Dating Real Estate and your Mortgage Broker

"What is a mortgage broker?" said nobody during my high school career fair.

Well, thanks to the UBC Sauder School of Business, now I know the official version and have the paper to prove it.

But that's boring. Let's assume that nobody under 21 is interested in reading this, because let's face it, mortgages are a pretty dry subject matter. But not if we compare mortgages to your sex-life, which I am pretty confident nobody ever has but for the sake of argument, I'm going to give it a try.

Getting a mortgage, much like getting laid while single (or if already in a relationship, getting involved in a three-way) is a tricky slope; we have all been down the soul-sucking route when looking for prospective mates, from puberty through your 20's and on and on until you find that right someone you were meant to be with. So it is with real estate.

But much like reading Maxim for dating tips isn't the same as actually dating, just saying you are a mortgage broker isn't the same as actually brokering mortgages. Our (my) business is built on referrals, much like most blind dates are. Some blind dates are good, some are bad. And the best are the ones when you wind up being completely compatible with each other and live happily ever after.

This has 'bad idea' written all over it.