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Doing Business with your bank ~ as friends

March 11, 2013

Some profit is better than none and there is always the next customer who may not be so savvy that can and will be charged a higher rate. So before you go to the bank to get a mortgage or renew an existing one, educate yourself and prepare to do some bargaining. It can save you thousands of dollars.

Marie’s mortgage was coming up for renewal. As with most people, she wanted to pay the bank less, so she started shopping. She checked online for rates. She consulted several mortgage brokers and then contacted me. We were unable to help her due to a poor credit rating. So it was back to her Credit Union.

As a rule Credit Unions are a better bet for banking as their rates are normally a little better and they are a local entity. The staff is local and although they may transfer across town, they do not transfer across the country.  A personal relationship can be developed with the staff of a Credit Union. They do not make as much profit as a bank by design and profit is shared with the members.

Armed with her desire to get a better rate, Marie made an appointment with her Credit Union. She talked to the loans officer making it plain she was shopping for better rates. A credit check with her friendly local told her why she was paying more to borrow money. She always paid her debts.  She had no outstanding debt.  But she was late far too often to have a top credit score.

Within those paramaters  she was able to get a 2% reduction in her rates that she unable to get at any other banking institution.  Because she was a member of the Credit Union, she had been dealing there for many years and they did not want to loose her business, she was able to negotiate a rate that will save her a lot of money over the next Five years.

At her original rate of 6.75% on a $275,000 mortgage, she was paying approximately $1,884 per month or $22,608 per year. At her new rate of 4.75% she is paying $1,560 per month or $18,720 per year, a saving of $19, 440 over the Five year period. She also vowed to pay her bills on time to get an even better rate at renewal date.

The longer you are at a financial institution, the greater the possibility of this happening as long as you do your homework.  Because you have been with a bank for 10 or 15 years is not a good reason to assume you are going to get the best rates with any given credit score.  If you are not prepared to do some homework  and negotiate with the bank, be prepared to pay more money to borrow.  Every employee at the bank is working in the best interest of the bank, whatever story they may tell you.

If you are planning on buying a new house or renewing your current term, here are some tips to save money : 1) Ensure that your credit score is the best it can be (700 or better and it does not hurt your score to check it yourself) ,  2) Go online and check for current rates (Canada Mortgage.com), 3) Talk to a local mortgage broker with score in hand 4) Talk to the mortgage broker at your  bank and be prepared to negotiate.

Even with all of this, there are some ways to pay the banks less that are not easy to find, online or off. If you want to keep more money in your pocket, call  ~ 250.766.2106 or email me ~ fredmurray@shaw.ca for a cost free obligation free consultation to see if we can help even more.

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2 Comments
  1. It’s perfect time to make some plans for the future and it’s time to be happy. I have read this post and if I could I wish to suggest you some interesting things or suggestions. Maybe you can write next articles referring to this article. I desire to read even more things about it!

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