Most people in Canada take out a mortgage when they purchase a property. Purchasers borrow money, mortgage the property, and use it as collateral to secure the loan.
Despite historically low interest rates, trying to get a better mortgage rate is never forbidden. Even a small difference will allow you to save a few thousand dollars. Obtaining a 1.6% interest rate instead of 1.7% on a loan of 200,000 dollars over 20 years would save you no less than 2,012 dollars over the life of the loan.
You may be offered a different interest rate depending on several factors. For the best rates, you should focus on the following points.
Having a good credit report
The number of mortgage products (interest rate, term, conditions, etc.) is nearly as great as the number of potential buyers. Due to this, it is unlikely that two separate borrowers applying for a mortgage on the same property will be offered the same rate.
Several factors determine the interest rate a lender will offer you based on your loan application. It is important to take your credit report into consideration. Your credit record is used to determine if you qualify for a loan and what interest rate you will be offered.
How does that work? A good credit history will result in a better rate. A lender doesn’t want to lend so much money to a borrower who doesn’t always pay or who has a lot of credit card debt, for example. A lender who lends money to someone with a bad credit history is likely to charge a higher interest rate to protect themselves.
Make sure your credit report looks good if you’re trying to get the lowest rate. Pay off your other debts as much as possible and keep your credit card balances as low as possible (no balances at all is ideal).
A high level of income
If lenders think you won’t pay them back on time, they won’t offer you the best interest rate. Your income should be sufficient to repay them, so you can reassure them.
You’ll have to prove that you have a stable job. Your lender wants to make sure that you will be able to make payments without “skipping” any. It is ideal that you have worked at the same job without a break for at least two years before applying to a lender.
The level of income varies from person to person. It is no secret that lenders are allergic to risk. When evaluating the records of two applicants with similar income levels, lenders will favor the applicant whose income source is considered more stable. In particular, they prefer full-time employees. As a result, they will offer a higher rate to self-employed, commissioned, or full-time employees (to name a few).
Reduce the loan’s term
Generally, the longer the term of your loan, the higher the interest rate. If you can shorten the term of your credit, such as borrowing for 20 years instead of 25, you will also be able to get a better rate.
Get involved in the competition
Obtaining a better rate requires more time, but it is necessary. Compare several banks’ proposals and then compete with them until they obtain the lowest rate. You can even hold this roundtable more than once. Start with your bank, where you are already “known”. Ask your bank if they can match or beat the offer you get elsewhere, knowing that you are already a customer. The HomeWise online application process allows you to compare bank proposals without having to go to different banks. Upon applying on the Homewise website, their technology negotiates with over 30 banks and lenders to find you the best mortgage rate possible
Is the best rate just a myth?
It is true that the best rate exists. The problem is, finding it can be frustrating. It is very long. It’s not all bad news, however. A simple online application process makes Breezeful accessible to just about anyone looking for a decent mortgage rate. The specials change every day, so be sure to check on their website or give them a call to see what they can offer you.