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Owning a home is a dream for many Canadians, and getting a mortgage is one of the best ways to get closer to making the dream come true. A reasonable mortgage rate will assist you in the home buying process without burdening your financial status.
According to statistics, mortgage debt represented two-thirds of the overall increase in debt for Canadian families from 1999 to 2016. Since mortgage loans play a critical role in the home buying process, learning the tricks to get the best mortgage rate is crucial when securing a reasonable rate.
Study Mortgage Rate Trends
Your mortgage rate significantly impacts the overall cost of purchasing a property through financing. A borrower’s financial health plays a critical role in the rate they receive, but other factors, such as economic status and government monetary policy, are also important. Studying historical mortgage rate trends is the best way to determine how these external factors affect your rate.
Learning about mortgage rate trends can help you compare the current prime rate Canada banks offer with historical ones. When you better understand how prime rates fluctuate, you’ll get a clearer picture of what your mortgage rate might be.
Use a Mortgage Payment Calculator
A mortgage payment calculator will give you an overview of what your monthly payments may look like when you finance your home. To provide an accurate estimate, it will take your home price, down payment, amortization period, mortgage rate, and frequency.
Using a mortgage payment calculator will help you determine your affordability, allowing you only to finance a house you can afford. The calculator also allows you to compare mortgage rates from different lenders to determine which lender offers the best rate that reduces your monthly payments.
Shop Around for A Mortgage
A lower interest rate will reduce your financial burden over the life of your loan. You can compare lender origination fees, points, third-party fees, and mortgage insurance premiums that different lenders offer.
When shopping around for a mortgage, applying to multiple lenders can also save you money if a lender offers a better rate to beat their competition. When you compare lenders, you can decide which one best suits your financial needs.
Boost Your Credit Score
Your financial circumstances play a critical role in the mortgage rate you receive. When you have a good credit score, lenders trust your ability to pay back the loan. If your credit score is low, they see you as a financial risk and may charge a higher interest rate.
When you’re trying to get the best rate in Canada’s housing market, one of the best steps you can take is to boost your credit score. Pay off existing debt and refrain from getting new credit cards or other loans for a while.
Make an Informed Decision
You can get the best mortgage rate if you’re well-informed. Do your research, shop around, and take your time to find a mortgage before you start house hunting. Being knowledgeable about the process is an asset that can help you grab the best rate.