Are mortgage lenders the new cell phone company?

Mortgage lenders vs. cell phone companies

With advances in technology and the rate we share information, it’s no wonder that more companies are picking up practices from each other. Mortgage lenders and cell phone companies have comparable traits when it comes to their contracts and rates for new clients.

New customers get the best prices

Mortgage lender:
Mortgage rates change constantly! There are multiple Bank of Canada readings which can affect the rates of the mortgages the lenders offer to you.  If you have been in your mortgage contract for a couple years, the current market rates could be quite attractive compared to your current rate.  If you want this new attractive rate you will need to modify your mortgage, where the costs could outweigh the benefit.

Cell phone companies:
December was a great month until I heard of the promotional cell phone plan with 10G of data for only $60/month.  What a deal!  I picked up my phone and called my provider to find out it was only applicable for new contracts.  To get this new $60/month deal I would have to break my plan and pay a huge device fee!

When you break your contract

Mortgage lenders:
If you break your mortgage before the end of your mortgage term, you will have to pay the costs of a penalty.  This is calculated by way of three months’ interest or interest rate differential (IRD), dependent on if you have a variable-rate or fixed-rate mortgage.  You can have your mortgage moved on your maturity date without incurring a penalty. This isn’t always ideal when you see lower rates which could be financially beneficial.

Cell phone companies:
When you start a contract most providers will give you a phone for little or no cost in exchange for going on a contract.  At the end of the contract date, you will no longer incur a penalty and probably need an upgrade from your iPhone6.

Overage charges

Mortgage lenders:
When it comes in terms of mortgages there isn’t a direct overage charge, but I will call it a penalty charge.  If you are trying to pay your mortgage off in record speed but don’t have the right mortgage for it, you could be incurring a prepayment penalty.  This is charged if you pay more then your allowed yearly prepayment privileges.  The lenders use this to recoup some of the revenue they would have incurred through interest on the mortgage,

Cell phone companies:
If you go over your data or use too many minutes you could end up with a huge extra cost added to your next bill.

It’s hard to determine if you’re getting the best deal provided to you. Whether it’s a cell phone contract or your mortgage commitment. An unbiased mortgage professional can’t help you with your cell phone provider, but we can definitely work on your behalf to obtain the best rate and conditions for your mortgage.  Here at the Clinton Wilkins Mortgage Team, we’re always looking out for your best interest.