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How to choose the right mortgage lender when buying your first home?

“Always pick your yard based on your Summer lifetstyle.”


September 19, 2019 - Karl Yeh

Planning to apply for a mortgage? Who do you talk to? How do you get the best rates? In this episode, we discuss choosing the right mortgage lender for you. We also explore how to do your research when looking for a lender, questions you need to ask and if you can (or should) change lenders when renewing your mortgage. 

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What we discussed:

Karl Yeh:

Hi, everyone. I'm Karl. Welcome to another Homebuyer's School video, a channel where you get the latest strategies, tactics, and tips from home buying experts. And remember, if this is your first time on this channel, and you want to get the latest strategies from the experts, hit the subscription button below. Hit the little notification bell so [00:00:30] you don't miss anything.                

So today, I'm joined by Mujtaba Syed, Mortgage Specialist with the Bank of Montreal. And the question we're going to answer today is:

How do you find the right mortgage lender?

So Mo, there's a whole bunch of either the banks or different lenders, how do I go about finding the right one?

Mujtaba Syed:             

The best thing to do is do your research online. There's so much information online, finding out exactly.

Reading reviews, to me, is a really good one, right?

Looking at real life experiences with real life people, to find out how they were [00:01:00] dealt with, if their questions were answered.

Asking people that you trust, so you might have family members that have some really positive experiences.

And you could always talk to real estate agents. They might have one that they work very closely with, or even, let's say, builders.

All of these are great avenues to look for someone, but what I would always do is do your own research.

You will be with that lender for a long-term, where you might have needs in the future, you might have needs within that mortgage term that you might need help with [00:01:30] .

You want that person to be accessible to you, not only for the initial transaction, someone that gives you everything in a package that you're looking for, has the best terms and conditions, plus the best interest rate.

A lot of lenders now offer cash incentives, which they can do as well.

For example, for loyalty, if you bring your mortgage over, they can give you a gift, or they can give you a welcome to the bank program.

Look into that. A lot of different scenarios to look into to see what fits your needs the most when you're looking at a banker or a lender.How to finance your home

Researching your lender

Karl Yeh:                      

So when you talk about research, what kind of research do you mean in terms... Like, yes, Google [00:02:00] reviews and so on. Anything deeper than that?

Mujtaba Syed:             

Google reviews would be a really, really good one.

At the end of the day, it just look and see what other products that you might be looking for in the future.

There's so many different details that you can go into, because almost every lender provides more than just one service.

They offer many services, because these things affect you on a day-to-day basis, right?

These are everyday transactions that you use, and they could just be the difference between someone who's so close between lender a and lender b, that there's not a lot differentiating them, but it could just be that slight thing that you want [00:02:30] to be able to choose over whatever.

A lot of the time, just use how you feel about a lender, about the specific person. Go with their gut feelings to see, "Hey, I feel more comfortable with this person and with this bank than I would with the other bank," and then use that as well, as as a guiding thing. There's never a wrong way to do it either.

Karl Yeh:                      

And from from that point, right, you're going to have to have this relationship with this lender for the next... If your amortization is 25 years, that's 25 years with this same individual or bank, right?

Mujtaba Syed:             

Not necessarily, right, because...

So amortization [00:03:00] can be 25 years, but usually we do it at a term, right? So if your relationship with the lender starts and ends with that term, you can extend that term at the time of renewal if you want to.

For example, let's say, with the initial lender you went with a five year term, and then after the five year term you decide, "Hey, I'll stick with them for another five years." Now you've been with someone for 10 years.

But you might not want to stick with them for five years and maybe decide to go to a different bank. Then you will start a new relationship with a new different bank.

But it is a long-term thing.

So find a specialist or a lender or a broker that you're comfortable with, [00:03:30] and see how comfortable you're dealing with them in the long-term.

Karl Yeh:                      

How often do you find clients actually change from lender to lender after their term?

Usually it's just probably easier to just keep staying with the same lender, right?

Mujtaba Syed:             


It depends. I would say it's 50/50. Nothing wrong with shopping around and seeing what's out there. A lot of homeowners, they switch or upgrade their home every two-and-a-half, three years.

These are just stats.

And when you change, you could stay with the same bank, or you might switch to a new bank. And banks are always looking for ideas for people to switch, [00:04:00] right?

So they might come out with a specific marketing program that fits perfectly for you, because that's what banks want.

Banks do want you to switch, and they want to fight for your business.

So at renewal time I would encourage it, so you know at the end of the day your bank is still fighting for you from day one as they are from, let's say, five years from today, because they know there are other banks fighting for the same type of business or your business.

Karl Yeh:                      

Are you finding that some lenders are more specialized in a specific homebuyer types?

So for example, [00:04:30] first time home buyers versus second home buyers, or luxury buyers, or the type of mortgages, like a variable versus fixed?

Or is it more about the relationship with the lender?

Mujtaba Syed:             

I think most banks are very much and very similar.

There's only very few things that differentiate between a certain lender. And the reason why they do that is because they want to be able to cater to everyone in the market.

Now you might find an individual that works for a certain lender who might have experiences that someone might not have, but other banks might have other people that cater towards that too.

Every [00:05:00] lender has a certain policy that they use very... kind of go hand in hand, because keep in mind, in Canada, banks are regulated.

So all banks have to go through the same thing. And that makes it a lot easier for you to choose is because we're all going to be regulated the same and have very similar products. And I do feel like that is one of the strengths that we do have in Canada.

Our banking system is a lot stronger than, let's say, other places, is because we do have some regulations in place to safeguard the clients like yourself.

Best questions to ask when interviewing a lender

Karl Yeh:                      

So what are some of the best questions to ask when [00:05:30] you're actually interviewing your lender?

Mujtaba Syed:             

Product knowledge is a really a big one, right?

So ask them questions that you've done your research on, and ask them questions about insurance, the approval process and stuff.

And you feel like, "Hey, is there any gaps that you're missing?" If you feel like, hey, you're not as comfortable because you feel it's a product knowledge gap, maybe see a different bank at that time.

But ask them about terms and conditions about your mortgage, stuff that's hidden inside your mortgage, you want to find those things, interest rates, talk about renewals, talk about your approval process, talk about what you might [00:06:00] need to bring.

Some lenders might have different criteria for documentation, so might have other ones. All of that stuff is going to make a big difference in what you're looking for for sure.

Karl Yeh:                      

Great. Do you have anything else to add in terms of choosing the right lender?

Mujtaba Syed:             

Do your homework, get out there, talk to a few. Don't settle on one. I would recommend minimum two or three, finding out what's going to fit best for you.

And look in terms and conditions are so important. I can't stress this enough.

Rates are not the only thing when it comes down to a mortgage [00:06:30].

More important than rates are terms and conditions, prepayment privileges like, let's say, a mortgage cash account that we have that other lenders don't offer. That could literally make or break a deal between a deal is because a certain type of a incentive that is inside the mortgage other places don't have.

So research is very, very key.

Question of the Day

Karl Yeh:                      

So the question of the day I have for you is,

How did you go about choosing your mortgage lender? And do you have any tips and advice? And if you actually had a bad experience, can you let us know why you had that bad experience, and so [00:07:00] other viewers may avoid it?

Let us know in the comments section below.

So if you want to know more about the actual mortgage approval process, we've got a great video series here, as well as other videos on mortgages here as well. Don't forget to subscribe to keep learning from the experts, and I'll catch you in our next video.


Your turn:

Let us know if you have additional mortgage questions or home buying questions that we can answer by submitting them in the comments section below. 

Homebuyer's School publishes new content weekly so subscribe or check back regularly for the latest information, strategies and tips from home buying experts. 

About Mujtaba Syed:

Mujtaba is an experienced mobile mortgage specialist with a demonstrated history of working in the banking industry. Skilled in Negotiation, Commercial Lending, Banking, Sales, and Credit Analysis. Strong product management professional.

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