There are a couple of different answers to this question. First, because I own and operate various mortgage companies and oversee a large amount of funded annual mortgage volume, one of the perks the banks give me is the ability to offer lower interest rates than my peers. Secondly, when it comes to mortgages for owner-occupied homes, these are much thinner mortgage files to work on compared to those of a real estate investor’s file, who may have multiple properties. Because of this, these files do not require as many staff to facilitate an outcome – and therefore I have pledged to provide rate buy downs whereby my firm agrees to take less compensation from the bank, which results in even lower interest rates for my clients.
Sadly, there was a change made to the securitization rules in the Canadian mortgage landscape back in 2018, which essentially gave the major banks in Canada a monopoly in the rental mortgage space. With very little competition amongst the banks for these mortgages, they generally carry a pricing premium compared to owner occupied mortgages. There is also a hidden fact that banks these days don’t clamor for rental mortgage business because they believe real estate investors are way less likely to open new bank accounts, take bank credit cards, or sign up for bank insurance policies, compared to a first-time buyer as example.
Instead, I recommend all investors reach out to my alternate company: Better Mortgage Select that is entirely focused on working with real estate investors and helping them find the best strategic mortgage solutions.
I love it when clients have a mortgage renewal, because I always know for a fact that I will be able to help them one way or another. First, if a client’s current bank is not initially offering competitive rates, I can provide them with an email showing the lower rates I have available in the open market, therefore providing leverage that my client can use to get a better offer from their bank. Alternatively, if the client’s bank continues to play hard-ball, I can process an application to see which other banks or mortgage lenders are willing to compete for the client’s business.
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