Are you looking at the beautiful box or what’s inside?

If I gave the option of choosing between two cell phones, which would you choose?   Both phones had similar specs and were identical in almost every way… except PHONE one came in a nicely gift wrapped box with a bow on it.   PHONE two came in a brown paper bag but was less expensive and also had slightly better options.

Most of us would choose PHONE two right?  Wrong!   When it comes to mortgages, most of us are focusing too much on the beautiful gift box and not paying enough attention to the contents.  They say around 47% of all mortgages go through a BANK and 39% go through a Mortgage Broker.   Broker share is up, but not enough in my opinion.

When it comes to mortgages, historically the BIG SIX BANKS have been charging higher rates than what can be had from MORTGAGE BROKERS. (see Bank of Canada study ‘competition in the Canadian mortgage market). And their inflated prepayment penalty calculations are now infamous (typical BIG SIX BANK penalties are around 4 times higher than other lenders).

Yet, most Canadians still turn to their local bank branch for mortgage advice and mortgage products.   It’s like we just can’t help ourselves.   It’s a big marketing machine designed to make us feel good and comfortable.

They say a good salesperson can sell anything to anyone.   What’s that old saying…  “they could sell underwear to a nudist” or “they could sell hay to a farmer”.  As Canadians, we are exposed to a very strong marketing presence from our BIG SIX BANKS.

Banks spend $billions each year trying to get your attention.  Think about your typical day… how many times do you hear or see at least one of the BIG SIX BANKS logos?  10, 20, 30 times a day?  This strong presence has helped the banks develop a certain level of trust and comfort with most Canadians.  We just feel good about dealing with a Bank.

But, are we being too trusting?   Is there a better alternative?  Are we getting the BEST deal?  According to the Bank of Canada study, you can do better with a mortgage broker.

Next time you think about a mortgage, don’t look for that shiny box.  That gift wrapping may cost you more than you have to pay.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca