- Hey it's Nolan Matthias,
and welcome back to our series
on Best Bank in Canada to Get a Mortgage.
This is part three of the series,
and today we're gonna pit our non-bank
and bank competitors against each other.
That's right, First National versus Scotiabank
to see where's the best place
in Canada to get a mortgage.
But before we get into it, do me a favor
hit that subscribe button, hit that notification bell.
And if you hit that like button, I'm gonna tell you
about how that first video ruffled some feathers
in the industry after we put it out on Facebook
in one of the mortgage broker forums.
But let's save those juicy details to the end,
and let's get into it,
and let's talk about bank versus non-bank mortgages.
Because really what we're discussing
today is not First National versus Scotiabank.
What we're discussing is banks versus non-banks in general,
and where the best place for you is to get a mortgage.
And I'm gonna go through the reasons why you should
possibly get a mortgage at a bank,
and I'm gonna go through the reasons
why you might wanna get a mortgage at a non-bank.
And at the end, hopefully you have the information you need
to help decide where you
should get your mortgage personally.
I'm gonna link to part one and part two of the series below.
In part one, we compared the banks to each other.
In part two, we compare the non-banks to each other
and try to determine which lender in those categories
is the best option for most people.
To compare the banks and the non-banks,
we use their prepayment privileges
in order to determine who the best lender
in each of those categories was.
Now, we got a little bit of pushback on this
because obviously not everybody gets to use
their prepayment privileges,
but the reason we were using prepayment privileges
was because it's kind of an indication
in our mind of the greed factor of the bank.
So how quickly a lender will let you pay off your mortgage
is directly correlated to the minimal amount
of interest that they're going to charge you over the life
of the mortgage.
The greater your pre-payment privileges,
the less interest they're willing to charge you.
Now everything else on a mortgage, including interest rate,
amortization, all those things are basically a commodity.
So they're all the same.
So when you start looking at mortgages
and you start thinking, okay, well what's different?
Prepayment privileges are the only things that are different
from one lender to the other.
So this created some controversy.
Some people are like,
oh, you can't use pre-payment privileges
'cause most people won't use 'em.
Our experience is actually
that a lot of people will use 'em.
But you can't use prepayment privileges
because most people aren't gonna use 'em
and that's not a fair way to compare mortgages.
Well, if we aren't using that to compare mortgages,
if we aren't using how quickly a lender
will let you pay off your mortgage,
then what else are we going to use to compare lenders?
The color of their logos?
Like come on, stupid.
So we stand by our comparison
on the one thing that is primarily different
between different lenders,
and that is their prepayment privileges.
It's pretty cut and dry in our mind.
Now to remind you why First National
and Scotiabank won their respective comparisons,
it's because they both have similar prepayment privileges.
They both allow you to increase your payments
by up to 15% per year,
they both allow you to make 15% lump sum payments per year,
and they also allow you to double up payments
at any time that you like.
Now with First National and Scotiabank
there's one primary difference.
And that's with Scotiabank
if you have made advanced payments
you can opt to skip a payment in the future.
That's a really cool feature.
But other than that,
their basic mortgages are fairly comparable.
Now that's just their basic mortgages,
because when you start getting into bank versus non-bank,
non-banks do basic mortgages extremely well.
But there are some more specialty
products that you can only get from a bank.
And that may be a reason why you would choose a bank
over a non-bank lender.
Banks tend to have a broader range of products.
They have things like home equity lines of credit
that you can get.
You can get mortgages that are split up
so that maybe you wanna go half variable, half fixed.
You can get mortgages that are readvanceable.
So as you pay your mortgage down,
you get a line of credit that grows equal to the amount
of principal that you've paid off.
These are all great features,
and all great reasons to choose a bank,
especially if you're putting more than 20% down.
Banks can also do what's called balance sheet lending.
So let's say you're almost at the limits
of what you qualify for, and you're like 0.2%
0.3% off of being able to qualify for the mortgage
that you're applying for.
Well, banks can often say,
well because we've got balance sheets,
so in other words, because we take deposits
and it's our money,
we're gonna make an exception in this case
and we're gonna go a little bit higher
and make an exception to what the typical guidelines are.
With most non-banks you won't find that.
So a little bit more flexibility if you're kind of reaching
towards that limit of what you qualify for.
Hey, so just a quick aside here,
I know this product stuff and all this lender stuff
can be confusing, and you know what, it's designed to be.
But you know what, it's also 2020 heading into 2021,
and there's this service called a mortgage broker,
who is completely free
and we'll take a look at your finances
and make sure you're in the right product
with the right lender.
Does it really make sense not to take advantage
of a free service?
And whether or not you end up getting a mortgage directly
through a bank, through a bank through a broker,
or through a non-bank through a broker,
at least if you have that conversation
you know that your bases are covered.
It's an absolute no-brainer.
So please make sure that you're at least
having a conversation with somebody like us
at Mortgage360 or a broker somewhere across the country
who can help you make sure that you have the right product,
and the right lender, and the right overall fit.
Now to contrast that,
what are some reasons you would wanna use a non-bank?
Well, if you're getting a fixed rate mortgage,
typically the penalties are a little bit lower.
If you're getting a variable rate mortgage,
often the lock-in rates that you would lock into somewhere
down the road are going to be significantly lower.
And I think this is the most important piece,
maybe it's because I'm a mortgage broker,
but they will often allow a mortgage broker
to continue to represent you beyond closing,
and for the life of that mortgage.
Which is important because if you don't ever wanna
have to talk to a bank again you don't have to.
If you wanna be able to go and negotiate,
and have a little bit more negotiating power
because they're talking to your broker instead of you,
and there's a degree of separation between you
and that lender, then that's a good thing as well.
And if you wanna make a change to something,
you just call up your broker,
you say hey, I wanna make this change.
And they spend the time on the phone,
or emailing with the lender that you deal with,
and it ends up saving you a ton of time.
And here's what we find,
is the people that should deal with the bank
are often the self-employed,
the people who maybe wanna pay off their mortgage
a little bit faster but also wanna have the ability to pull
back those funds in a line of credit if they need it,
or people who generally just wanna have a line
of credit available to them.
Those are bank clients.
First time home buyers,
people who just need a basic mortgage,
often end up being better clients for non-bank.
And in my mind there's no reason to try to convince somebody
to go to a bank or go to a non-bank.
It's purely which one makes the most sense for you.
And the way that we determine which one makes the most sense
for you is to ask you questions.
Do you ever see needing to be able to pull back this money?
Do you ever see needing to be able to skip a payment?
Do you see ever needing a line of credit?
Okay, any of those things are true?
Then yes, you're a bank client.
None of them are true?
Well, let's see if we can get you a lower rate
and get you a better deal somewhere else.
Now it's interesting.
We created a little bit of controversy with part one
of this video, the best bank in Canada to get a mortgage.
We got absolutely attacked before
a few people even watched the video.
They naturally assumed that TD and Scotiabank
were going be the best lenders
because those are two that deal in the broker channel.
Because I'm a mortgage broker,
they assume I'm gonna pick the two lenders that deal
in the broker channel.
Which kinda makes sense,
but I can assure you that that is anything but what I did.
Being the first B Corp certified mortgage company
in North America,
having that certification around accountability,
transparency, being honest and being fair,
that's hugely important to us.
So I wouldn't go out there and pick lenders
as the best bank in Canada to get a mortgage
based on who I can deal with.
I picked them because they literally have the best product.
When you think about the fact that TD and Scotia
deal in the broker channel,
and they're the two lenders that allow you to pay
off your mortgage the fastest,
and ultimately pay the least amount of interest over time.
Well, is it any coincidence
that those lenders that have the most flexibility
and have the least greed when it comes
to the prepayment privileges,
are also the lenders that are willing
to allow a client to have independent representation
from a mortgage broker so that they can get good advice
and have all of their options looked at?
I don't think that's a coincidence.
I think if you've got the best product in the industry,
you want as many people selling it as possible,
that's why you deal with brokers.
And if you don't have the best product in the industry
of course you don't wanna deal with mortgage brokers,
you don't wanna have them comparing your product
to somebody else's product
because you're going to lose every single time.
It shouldn't be a surprise that the lenders
with the best products, the banks with the best products,
deal with mortgage brokers.
'Cause if you had the best products in the industry,
wouldn't you want more people selling it?
Think of it this way.
A lender who is willing to let you pay less interest
and get out of debt faster
is probably gonna allow you to get a second opinion.
And that's why Scotiabank
and TD won the best bank in Canada contest.
It's because at the end of the day,
they're the ones that consistently look
for the win-win solution.
And to them, having brokers sell their mortgages
is a win-win because their mortgages can compete
with all the other lenders in the industry.
Now to round this up and conclude this conversation
about the best bank in Canada or non-bank in Canada
to get a mortgage, let's make it clear.
Here's what matters when you're getting your mortgage.
One is that you have flexibility.
Two is that you're comfortable with who you're dealing with.
And three is that it's the right mortgage for you.
That's all that matters.
Get the right mortgage for you.
Whether you're dealing with a bank,
or you're dealing with a non-bank,
get the mortgage that makes the most sense
for your personal circumstance.
And if you need help with that,
the comment section below is always open.
And so is mortgage360.ca.
Cheers.