5.3.2 Getting the best deal

How do you get the best deal when you're negotiating with large financial institutions? You can take advantage of the fact that mortgage lenders compete against each other. You don't have to take the first offer that your financial institution gives you. Ask if it is their best offer, and if they are prepared to negotiate if you get a better offer from another institution.

Negotiating often focuses on the interest rate, but that is only one issue that can affect the cost of your mortgage. You can balance different items when you shop around for your mortgage and focus on the ones that are important to you:

• interest rate (Different institutions may offer rates ranging from the "prime" rate plus from one-half to five percent. The prime rate is the rate they charge their best customers.)
• down payment
• amortization period and term of the mortgage
• open or closed mortgage
• monthly, biweekly or weekly payment options
• prepayment options
• fees or charges you pay to change any of the terms of the mortgage, such as paying it off early
• the right to transfer a closed mortgage if you sell the house
• mortgage insurance or life and disability insurance
• legal fees to purchase the property, register title or register a mortgage against the property (some institutions will waive fees to get your business)
• fees for your other banking services, such as account fees and safety deposit box fees.

Once you have an offer from a financial institution, you can ask other institutions if they will give you a better deal. If they do, you can ask the original institution if they will match it.

Mortgage brokers

Consider using a mortgage broker to negotiate your mortgage. Mortgage brokers represent several lenders and may be able to use their contacts and expertise to get a better deal than you are able to get. They are paid a finder's fee by the lender.

• Brokers may focus on a few lenders that they have a relationship with. Ask whom they represent and whether they are willing to contact other lenders.
• Brokers can negotiate mortgage renewals as well as new mortgages.
• Interview a variety of brokers and ask for references to find one you are satisfied with.

Mortgage brokers are regulated by each province or territory where they operate.

For more information, see the video Negotiating your mortgage.