A small change of .05% – .1% in interest rate will barely change your monthly payment, so don’t go chasing the lowest rate from big banks or discount brokers.
When shopping for a mortgage, it makes sense that you’d focus on the interest rate – after all, it’s the big number posted in the bank windows!
The secret is that the small differences in the bank’s interest rates don’t make much of a difference at all.
Banks use low rates to distract you from reading their terms and policies, which results in you paying them more in the long term.
So how much of a difference does a low interest rate actually make?
Let’s examine a $355,000 mortgage with the average rate in the market at 2.94%:
The low rate on the market is 2.89% — if you went with this rate you’d only save $878.76 over 5 years!
Now let’s say the high rate you found is 2.99%, but it has much better terms and penalties… this rate would only cost you $878.76 more over 5 years!
The example above is why I always coach individuals to shop for the total package when it comes to a mortgage and not just a low interest rate. In future lessons, I’ll break down the key factors to look for in a quality mortgage solution.
If you’re in a hurry and can’t wait for other lessons, see how much you can afford here... Once you find out and sign up, our team will further scan the market and finds offers catered for you. Then we walk you through the pros and cons of each, allowing you to feel 100% confident in your final choice.