Best Rate vs. Best Mortgage
The NFL Draft Pick that explains why Canadians Chase the Wrong Thing
If you’re a football fan like myself, watching the NFL draft for the first few rounds can be a whole evening of fun and excitement.
Back in 2021, the Cincinnati Bengals were on the clock with the 5th overall pick.
They already had their franchise quarterback in Joe Burrow - he was young, accurate, calm under pressure and a great leader for the team’s rebuilding era. He was (and still is!) the future of the team.
But - there was always the issue that he was getting crushed - his offensive line wasn’t strong enough to protect him. In his rookie season, Burrow tore his ACL after repeated hits. Every analyst was echoing the same thing going into the draft: Protect your quarterback.
So, for the 5th overall pick, the Bengals had a choice:
Do we go for the safe, “boring” choice of picking an offensive tackle to protect Joe Burrow? This was Penei Sewell, the best lineman available on the board at the time from Oregon, the best protection for their franchise quarterback - exactly what we need.
Penei Sewell at Oregon State
Or do we go for the flashy, explosive, "have Cincinnati fans go absolutely bonkers and jumping out of their seats cheering” wide receiver in Ja’marr Chase, a generational talent of his own right as a wide receiver - Burrow’s own former teammate with a proven record together. It was basically a highlights reel waiting to happen - and Cincinnati fans needed that morale boost after years of suffering, why would we keep them from that?
Ja’Marr Chase in Bengals Uniform
So what did the Bengals choose?
They went with Ja’marr Chase. Now any NFL fans know it was still a great choice - he’s been incredible, one of the best receivers in the game. Heck, we know he was even #1 for fantasy football leagues this season (if that’s a point of reference for you).
But the issue still remained - Joe Burrow kept getting hit. Injuries, Sacks, and undue pressure for the quarterback - when it would have been resolved with the right protection.
So… my question for you - Was the flashy pick worth it if the foundation wasn’t protected first?
Joe Burrow getting hit in a Packers vs Bengals game
This is Exactly how Canadians Choose Mortgages
Most people shop for a mortgage the same way the Bengals made that pick. They look at the exciting number, they share with their friends “hey, did you hear I managed to swing a 3.89% rate with my broker?”
It’s basically the only thing the average person will chat about when discussing their mortgage with friends and family - because that’s what’s exciting and tangible about it.
I field calls every day that start with:
“What’s your best 3 year and 5 year fixed rate?”
”Can you beat this rate?”
”Who’s the cheapest mortgage lender these days?”
Let me be clear - the rate alone is Ja’Marr Chase.
Because it’s visible, it’s impressive and it feels like winning. It makes you jump out of your seat and get hyped.
But the structure of your mortgage? That’s Penei Sewell.
It’s not flashy, it’s not something advertised on instagram or that people care about discussing over dinner.
But it protects your most important asset - your flexibility to work with what life throws at you.
What Happens when you Ignore Protection
Let’s say you go the Ja’Marr Chase route and snag the lowest rate from the bank. It’s exciting and you feel like you absolutely scored with your 3.99% interest rate. You chat with your friends “Oh, definitely hit up ABC Bank, they really nailed it on the rate for me”
But a year later:
You get a job opportunity in another city
You can’t ignore your awful bathroom anymore that’s been begging for a renovation for nearly a decade
You go through a separation
You get an opportunity for investment and want to access equity
Now you need to break the mortgage.
And you’re suddenly faced with the most awful combination of 3 letters you’ve ever heard: IRD.
Because of how some lenders calculate penalties using posted rates, your now “phenomenal” rate now comes with a $18,000 penalty (yes, I’ve seen this, and more). And let’s face it, that wipes out any savings you’ve had over the year.
Or, let’s say you do stick it out for your term and want to transfer for another best rate, you find out your mortgage was registered as a collateral charge, making it harder and more expensive to switch at renewal.
That’s the Joe Burrow season-ending ACL tear.
So, what I’m trying to get at is the problem wasn’t the rate, it was the lack of protection of your quarterback - your assets, your flexibility.
Why this Keeps Happening
Easy: Rates are easy to compare what you think are “apples to apples”. But the fine print is where they get you.
No lender I’ve ever seen has ever marketed:
”Lowest Penalty Calculation model!”
”Most flexible break terms!”
”Easiest Portability!”
They market the rate. Regardless of the fine print.
But mortgages aren’t won on draft day (in this case, your funding). They’re won in year 3 of your 5 year contract to Team ABC Bank when life changes.
And you know what? Sometimes you hit the jackpot on draft day when the Best Mortgage (Penei Sewell) and the Best Rate (Ja’Marr Chase) are one in the same.
You’re going to live here forever, you don’t plan on making renovations, or you have a healthy savings account for a rainy day fund - draft Ja’Marr! And sometimes the Ja’Marr rate also comes with the best flexibility. That, my friends, is what I say is what I try to aim for you.
The Smarter Question
Before you sign a mortgage commitment, instead of asking:
”What’s your lowest rate?”
Ask instead:
”If I had to break this mid-term, what would it cost me to do that?”
“Do you calculate based on IRD with posted rates, or IRD with current rates?”
“Is your penalty based on IRD or 3 months interest? When does which apply?”
If the answer is vague, unclear or avoided - you’re drafting Ja’Marr Chase my friend. And left Joe Burrow exposed.
Maybe everything works out and Joe Burrow comes out unscathed. But statistics show 68% of borrowers pay out their mortgage by year 3 of their 5 year term for a multitude of reasons.
The Real Lesson
Look, Ja’Marr Chase wasn’t a bad pick. He’s elite - his chemistry with Joe Burrow is unmatched, with so much history behind them. They even won the Super Bowl in Ja’Marr Chase‘s rookie year. But year over year, Burrow is getting beaten up on the field.
In mortgages, the lowest rate is exciting.
But protection - flexibility, penalty structure, portability - is what keeps you safe when life doesn’t go according to plan.
The best mortgage isn’t the one that looks the best on day one, it’s the one that still works when things change.
Let’s make sure you’re drafting the best Penei Sewell for whatever life throws your way.
Signing off, your friendly neighborhood Mortgage and NFL Nerd,
Jeff Dinsmore
Mortgage Broker
velomortgage.ca
FSRA # 10315
TMG - The Mortgage Group