Back in the day someone would ask me – what’s your best rate, Janette? And like MAGIC (!) I would be able to quote them in a matter of seconds. These days things are SO different. It is imperative that we as Brokers not promise any rates until we have at least a partial application – and here’s why:
There are 3 different “boxes” (that has nothing to do with credit or income) which a client needs to fit into that will to dictate their rate offering by the lenders:
1) Insured – a mortgage that is insured with mortgage default insurance through one of Canada’s mortgage insurers, CMHC, Sagen or Canada Guaranty. An insurance premium is added to, amortized, and paid along with the mortgage. The premiums range anywhere from .60% to 4% of the mortgage amount and gets smaller as you get closer to 20% down. Keep in mind, some deals may require these premiums be paid even if the client has 20% down, for added security to the deal. Insured mortgages are the safest type of mortgage loan for the banks and the most cost-effective way of lending mortgage money, so clients seeking or in need of an insured mortgage will likely get the best rate offering on the market.

2) Insurable – a mortgage that may not need mortgage insurance (20% or more down payment) but would qualify under the mortgage insurers rules. The client doesn’t have to pay an insurance premium but the lender has the option to if they choose. While Insured mortgages get the best rates, Insurable mortgages are typically a close second.
*Insured / Insurable mortgages can be bundled and sold as Mortgage Backed Securities (MBS), meaning banks can get that money back quickly so they can lend more out.
3) Uninsurable – a mortgage that does not meet mortgage insurer rules such as refinances or mortgages with an amortization longer than 25-years, OR purchases over 1M. There is no insurance premium required. If a mortgage is Uninsurable that means the banks have to lend their own money and have to commit to that loan for the full term at the very least. This makes it a more expensive loan for the bank, so they pass the cost on to the consumer as a premium on the rate – typically 10-20 basis-points higher. Consumers buying over 1M or looking to tap into the equity they’ve built (consolidation, investment, home renovations) or wanting to keep their payments as low as they can (30-year amortization) are paying the price.