Whether you are looking for a mortgage or considering your options for renewing an existing agreement, financial institutions offer interest rates that are ranging and you as the borrower need to shop around to make sure you get a mortgage that works for you. It may be tempting and common-place to just focus on the larger banks because it is believed that only they alone have the ability to offer favourable rates and policies.
Your mortgage is a big commitment and you want to make sure you get the best deal possible. You need to explore as many available mortgage options as possible. One option that some mortgage seekers do not think about is attending a credit union but this can result in many benefits and can prove to be essential in you getting the mortgage that meets your needs.
1. Saves money
Saving money is a principal goal for most people and shopping for a mortgage is no different. When obtaining a mortgage, bigger lending institutions will more than likely charge you fees for underwriting, appraisal, and the application process itself. You are giving this institution your business and as a result should not have to be subjected to these costs. Credit unions pride themselves on offering lower fees. While the main goal of big banks is to generate revenue, credit unions do not charge excessive fees and periodically pass the savings they do have on to members of the institution.
2. Better rates
The biggest factor that usually determines what lender a person goes with is the interest rate offered. Typical mortgage terms in Canada are 5 years and it would benefit you to get a lower interest rate to ensure your payments go largely towards the principal amount of the mortgage. Albeit not by much, interest rates can differ between institutions but you are in the driver’s seat because if one lender is not offering a favourable interest rate, you can easily make contact with another.
Credit unions are renowned for offering competitive interest rates because they are less concerned with profit than they are with being able to serve people and merely cover their costs. Credit unions offer mortgages with interest rates that are typically 0.56 percent lower than the lowest interest rate of bigger banks, making the choice of using a credit union an easier one.
3. Better service
Bigger lending institutions are accustomed to cranking out mortgage applications at high rates and tend to be more considered with generating revenue from your business rather than taking the time to figure out which options best meet your needs. In contrast, at a credit union you are more than just a number and a vehicle to generate profits for shareholders.
When you meet with an employee at a credit union, you are treated as a person and they will take the time to meet with you, explore options, and set up a mortgage with terms that work for you. As a bonus, this same employee can assist you with other banking needs that may put you in a better position to save on fees and become eligible for discounts.
4. Bad credit option
Through bigger lending institutions it would be next to impossible to obtain a favourable mortgage with a poor credit score. When dealing with a credit union, all hope will not be lost. Some credit unions have programs for first-time buyers that may have poor credit and they cover the full amount of the mortgage plus any closing fees or ones that help customers to take control of their budget and in turn improve their credit score.
Instead of denying you a mortgage outright due to poor credit, credit unions often take into account all circumstances and considerations that may have caused your bad credit score and base decisions on these. This means that as long as you have the means to make payments on the mortgage, you may still qualify.