More than half of Canadians do not shop around for their mortgages and over the course of their amortization, they may end up paying thousands of dollars more than is necessary, says Toronto-based Homewise. Results from an early April 2021 cross-Canada poll by Homewise showed that 37.9 per cent of potential home buyers would go to their current bank; 13.1 per cent answered one of Canada’s big banks 49.1 per cent said somewhere else.
The company polled 750 mortgage-seekers between the ages of 25 to 44, many of whom are first-time home buyers.
“We were surprised by how many Canadians would only go to one bank for a mortgage,” says Jesse Abrams, CEO and co-founder of Homewise. “This is an outdated and inefficient way to finance one of the biggest commitments of a home-buyer’s life. By not shopping around, home buyers can lose money on rates, but that’s only part of the story. Mortgage providers offer different features such as penalties if a mortgage is broken before the term is complete, which can be thousands of dollars more depending on the lender. It’s a case of comparing apples and apples before signing on the dotted line, and it can be complicated.”
Homewise offers an online mortgage process that matches borrowers with mortgage options from more than 30 banks and lenders.
Turning to a familiar bank may seem like the easiest solution, which is probably why more than half of Canadians do that, the company says. But there is a lack of transparency in many of the available options, especially if a buyer considers only one lender, it says in a news release.
“It’s about due diligence,” Abrams says. “We’re talking an outlay of hundreds of thousands of dollars, so why go for only one option? We know that consumers obsess about interest rates, when that is only part of the equation. Too many Canadian borrowers, especially first-time home buyers, don’t realize they have other options besides banks, and they are far too often leaving thousands of dollars on the table.”