How mortgage advertising can mislead
Headline rates, maximum discounts, service bundles, and underwriting additions.
A low advertised rate is usually the best case: it may require ≤80% LTV, assume the maximum discount, depend on account or service conditions, exclude insurance riders, or be replaced by a higher risk-priced rate after underwriting.
Key points
- A headline rate often assumes the maximum discount and ≤80% LTV.
- Discounts can depend on account or service conditions you must maintain.
- Insurance riders and term surcharges add to the real rate.
- Underwriting can replace the teaser with a higher risk-priced rate.
Why the headline can mislead
A low advertised rate is a best-case number. Unless expressly described as fixed for the whole term, it may change before disbursement, change after disbursement, require an 80% or lower loan-to-value ratio, include account or service conditions, exclude optional insurance riders, or be replaced with a higher "guarantee-backed" or risk-priced rate after underwriting. Advertising also emphasizes the nominal rate while stating fees separately, so the headline never reflects the all-in cost.
What to do instead
Treat every advertised rate as a starting point and get a dated written quotation with your actual LTV, term, discount margin, fees, insurance additions, and any service conditions. Reconcile a lender’s headline page with its detailed-course page, because they can differ. Then compare the all-in cost across lenders over your expected holding period, not the biggest advertised discount.
Key points to carry away: A headline rate often assumes the maximum discount and ≤80% LTV; Discounts can depend on account or service conditions you must maintain; Insurance riders and term surcharges add to the real rate; Underwriting can replace the teaser with a higher risk-priced rate. Use the linked guides and calculators for the full decision, and confirm anything material with the lender, a licensed broker, a judicial scrivener, or a tax accountant before you act.
Who this is for
- Borrowers comparing advertised rates
- Anyone reading a mortgage promotion
What this is not
- A specific rate quote
- Never treat an advertised rate as your guaranteed rate; only underwriting and execution determine it.
Frequently asked questions
How do I find the cheapest mortgage?
Compare the all-in cost — execution rate, fees, insurance, and early-repayment costs — over your holding period, not the headline rate.
Can the discount margin disappear?
It can under certain contract conditions. Confirm whether the discount margin is permanent for the term.
How do I compare lenders fairly?
Use the same execution date, LTV, term, insurance, fees, and holding period for every quote.