TLC tried to warn us in 1995.
I suspect they weren’t talking about changing mortgage lenders two days before a financing deadline. But I’ve spent enough time in this business to hear that chorus a little differently.
About $80 a month.
That was the estimated payment difference between the mortgage we had arranged and the lower rate these buyers found at their bank.
After more than a year of searching for a home, two purchases they’d walked away from, and finally finding “the one,” that $80 became the deciding factor.
They chose the lower rate. The bank couldn’t complete the required approvals before their financing condition deadline. They lost the house.
I keep coming back to that. Because when we talk about getting a “better deal” on a mortgage, surely the house has to be part of the calculation.
These were first-time home buyers who’d been looking for over a year. They’d viewed multiple properties, had two offers accepted, and received conditional mortgage approvals through our team. After the home inspections, they decided not to proceed with either purchase.
Walking away after an inspection can be the right decision. Finding a home you love doesn’t mean you have to accept whatever comes with it.
Another five months went by. Then they found the one they wanted to move forward with. Their offer was accepted, and we arranged another conditional approval.
This time, they decided to put 20% down and take a conventional mortgage. The rate available through us was 0.20 percentage points higher than the insured option.
That can feel backwards. You bring more money to the table and the rate goes up?
But the insured rate has to be considered alongside the mortgage default insurance premium. With 20% down, buyers can generally avoid paying that premium. A lower rate on its own doesn’t tell you which option costs less overall. You also need to consider how much cash you’ll have left after the purchase. CMHC explains how down payments and insurance premiums work.
Then their bank offered them a conventional rate 0.20 percentage points below the conventional rate we’d secured.
They brought it back to us and asked whether we could match it.
Fair question. I’d expect a buyer to ask.
In this case, the answer was no. We’d already negotiated the rate on their behalf, and there wasn’t a further reduction available on that mortgage.
Mortgage pricing doesn’t come with an unlimited supply of “let me ask one more time.”
So they had a decision to make.
They could proceed with the mortgage commitment already arranged and have our team continue managing the outstanding conditions. Or they could move to the bank for the lower rate, work directly with its team, and go through that lender’s approval process.
There were only a couple of days left before the financing condition deadline.
That deadline belonged in the comparison just as much as the interest rate did.
A new lender needs to make its own lending decision. Having your documents ready can help, but the review still has to happen. Your income, down payment, property and any outstanding requirements need attention on the new lender’s timeline.
Meanwhile, the deadline in your purchase contract keeps approaching.
An extension may be possible, but it requires the seller’s agreement. In Alberta, an extension to the condition deadline should be agreed to in writing before the existing deadline passes. You can’t build your financing plan around assuming you’ll get one. RECA explains the deadline and extension requirements here.
And signing a mortgage commitment isn’t a magic finish line either. Its conditions still matter. Whichever lender you choose, you need to understand the outstanding requirements and confirm with your mortgage and real estate professionals that you’re in a position to remove your financing condition.
These buyers chose the bank’s lower rate.
The required conditions weren’t cleared in time, and the purchase fell through.
After all that searching, they were back to looking for a home.
Now, $80 a month matters. I’m not going to pretend it doesn’t. People are trying to manage mortgage payments alongside groceries, utilities and everything else that seems to get more expensive every time we leave the house.
Wanting a lower payment is completely reasonable.
But that saving depended on the new lender getting the mortgage arranged in time. The risk of missing the deadline had to be weighed alongside the potential benefit.
That’s the part that gets lost when the rate becomes the whole conversation.
Two interest rates are wonderfully easy to compare. Put them beside each other and one is smaller. Very satisfying.
It takes more effort to compare how far an application has progressed, what still needs to be reviewed, who is following up, and whether there’s enough time to resolve an unexpected question.
Those things are less exciting than a lower number. They’re also part of what gets a purchase completed.
If another lender offers a better overall mortgage and can meet your deadlines, switching can make sense. Buyers should compare their options and ask questions. The earlier those conversations happen, the more room there is to act on the answers.
With a couple of days left, though, you have to put a value on the work already completed and the time you no longer have.
That’s why I keep talking about mortgage strategy. It includes the rate, the payment, the terms and the practical steps needed to get you into the home you chose.
These buyers had spent more than a year finding that home. The potential saving was about $80 a month.
They never got to make those lower payments on it.
A lower rate only saves you money if the mortgage actually happens.
