Amanda has been banking with TD literally from the time she was born. She has never banked with any other bank. So when the time came to get a pre-approval on our mortgage to begin putting offers on homes, she was adamant about us going to TD to get it done. She liked having everything at one bank.
A little known truth is that Amanda as with many aren’t the exception to go with their existing bank when looking for a mortgage or any other bank products. It often seems like the easiest choice. Studies have shown that people are more likely to get divorced than make a switch to another bank.
Having worked at a bank myself before, I’ve seen this story too many times where existing clients of a bank will do this not knowing it can cost them thousands of dollars over their lifetime. Banks know this so they generally offer their existing clients a higher mortgage interest rate than for new customers and they do not make it known that mortgage rates are negotiable. After all, banks are a business, and the onus is on us to be informed customers.
The pre-approval mortgage rate we got was 2.9% for a five year term which was good for 90 days. At the time, we only cared about getting a pre-approval so that we had the assurance to know we could make firm offers (no conditions on financing). We didn’t think much about the rate as our focus was really on finding the right house.
When we found out the sellers accepted our offer, we were extremely excited to finally have someone accept our offer (it took us more than 5 offers on different houses before this). However, we had 30 days to close so that meant timing would be tight and we needed to get all our ducks lined up asap.
I did some research before hand so we knew the pre-approval rate was high. Just doing some quick research online on Rate Supermarket and Ratehub, we knew that the lowest rates at the time with similar terms at other lenders were going for 2.39% (0.51% less). This may not seem like much but on a $520,000 mortgage it translates to about another $2,100 extra in mortgage interest per year or over $10,000 in 5 years.
When we went back to TD, we were clear that we wanted them to match this rate and that we would go with them if they could honor the lower rate. This was the best time to negotiate for a lower rate because we needed to close on a house in 30 days, so this was a deal that was going to have to happen with TD or a deal that TD would lose to another lender.
As much as Amanda didn’t want to switch lenders, Amanda knew that saving another $10,000 is worth switching for.
The financial representative didn’t have the authority to do this so she had to ask the branch manager. After waiting 15 minutes, the financial representative said they could honor the lower rate and we ended up getting the mortgage with them.
Our story isn’t unique but hopefully if you are mortgage shopping, our story gives you that extra kick to negotiate your mortgage rate before buying your house as one question could save you tens of thousands of dollars over the life of your mortgage.