Special to the Financial Independence Hub
For many Canadians, shopping is a national pastime. Some of our favourite activities include planning a vacation and picking up new furniture – unfortunately, shopping for a mortgage and auto insurance doesn’t seem to be one of them, finds a recent Ipsos survey commissioned by LowestRates.ca.
For most of us, buying a home is the single biggest financial decision of our lifetime. It shouldn’t come as a surprise then that 67% of Canadian mortgage holders consider taking a mortgage a “very important” financial decision. Yet, what comes as a shocker is how little time we’re spending shopping for mortgages. We’re spending an average of 7.75 hours planning a $2,000 vacation, yet we’re only spending 5.75 hours (2 hours less) finding a $300,000 to $500,000 mortgage. I discuss these surprising findings and more in my upcoming book, Burn Your Mortgage.
The survey findings aren’t any different for auto insurance. While 52% of us believe auto insurance is a “very important” financial decision, we’re spending more time picking furniture and choosing a paint colour than auto insurance. Based on these findings, it would seem many of us don’t have our financial priorities straight.
Take the time to shop for Mortgage and Auto Insurance
Don’t think it’s worth the hassle to shop around? A mortgage rate 0.5% lower on a $400,000 mortgage can mean saving thousands of dollars in interest over the life of your mortgage. In fact, by saving only $100 per month on your mortgage with a lower rate, you could afford an all-inclusive trip to the Dominican Republic in a year’s time or you could put the extra savings toward your mortgage and “burn your mortgage” even sooner like me.
Not enough of us are taking the time to shop the market. Many of us are also being loyal to a fault to the big banks. The survey found 2 in 5 Canadians did not search beyond their bank for a mortgage. Furthermore, only 8% used rate comparison websites when searching for their most recent mortgage. With many mortgage rate comparison websites out there, it’s easier than ever to comparison shop for a mortgage.
Millennials 3 times more likely to shop around than Boomers
Despite the slow adoption of rate comparison websites, many Canadians are finally starting to “see the light” and realize there’s a better way to shop for mortgages. The survey found 60% would be open to using a rate comparison site in the future.
So who’s leading the charge? It’s millennials. The survey found millennials are three times more likely to compare rates than baby boomers. This shouldn’t come as a surprise since younger Canadians are facing many challenges, including precarious employment (or as Federal Finance Minister Bill Morneau put it so eloquently, “job churn”), record level student debt, sky-high home prices in big cities and more recently new, tougher mortgage rules. Millennials are looking for new ways to save – their mortgage is a smart place to start.
Truth be told, it took Canadians a while to warm up to comparison shopping for flights and hotels, but once it became trendy with the younger generation, widespread adoption followed with baby boomers and older generations.
Comparison shop today and save
If you’re already using rate comparison websites for flights and hotels, what’s stopping you from using them to compare mortgage rates? You have a lot more money to save by comparison shopping for your mortgage. By only spending three to four hours more, you could end up saving thousands. Don’t you think it’s worth the effort? A rainy weekend afternoon in the fall is the perfect time to do it.
Whether you’re shopping for a mortgage or auto insurance, take the time to see if your bank is giving you the best rate.
Sean Cooper is the author of the upcoming book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom. At 27, he bought his first house in Toronto and paid off his mortgage in just 3 years by age 30. His articles and blogs have appeared in the Toronto Star, Globe and Mail, Financial Post, Tangerine’s Forward Thinking blog and MoneySense. You can follow him on Twitter @SeanCooperWrite.