Doing your research online can help you understand how good credit scores can help you get a better rate,
but there’s actually a lot more to the calculation than you might think. Here are some insider tips on surprising factors that can affect your mortgage interest rate:
1. Ontario is a great province for getting a mortgage!
Believe it or not, mortgage rates fluctuate from one province to the next. Ontario tends to have the most competition as far as lenders go, which works in your favour if you’re buying right here in London, Ontario or anywhere else in the province.
2. Low mortgage rates can come with strings attached
Sometimes the lowest rate mortgage isn’t the one that is actually best for you. If you’re hoping to pay down your mortgage quickly by making extra payments regularly, you may not qualify for the lowest posted rates, simply because lenders often include small caveats with their best deals. Even if you’re just getting a second opinion, make sure you check with a great broker to ensure that your low rate isn’t coming at another cost.
3. Long rate holds can increase your mortgage rate
It’s good to be able to get a pre-approved mortgage that the lender will honour for a certain number of days or months, but this can sometimes come at a cost. Lenders will sometimes only offer the best rates for “quick close” deals. It can be a risky move to wait, and is not really advisable--as rates can always go up--but if you know for sure that you are going to close on a deal in 30 or 45 days, be sure to let the broker know in advance of requesting a mortgage pre-approval, as that can often helps to shave off a couple of points.
4. The type of property you’re looking to buy can increase your mortgage rate
What do high rise condos, rental properties and cottages have in common? That’s right, you might have to pay more interest in order to own one. Lenders look at a variety of factors when assessing the type of rate they can offer you, and any properties that statistically carry a higher risk may increase your cost of ownership. If you’re just looking for a home for you and your family to live in, and you don’t own any other property, this likely doesn’t apply to you (unless the property is in really rough shape or has an unusual feature), but if you are thinking of expanding your real estate portfolio, you will want to have a good mortgage broker on your side to help combat the increase in mortgage rates you will likely start to experience.
5. If your mortgage is NOT insured
This one might seem counter-intuitive. You might think that putting 20% down or more, in order to avoid having to pay mortgage insurance, will make you appear to lenders as a better client. Yes, they do, but that doesn’t mean you’re going to get a better rate than someone who put less down on their property. Increasingly, lenders are seeing mortgage insurance as a form of security that justify offering lower rates. Depending on your situation, you might wish to crunch the numbers to see if putting less of a down-payment on your property--and paying insurance--will offer you substantial savings (and keep more cash on hand).
The rules of mortgage rates are changing more than ever before, and it’s increasingly important to have a great broker on your side who works for you, not the bank that’s trying to convince you that their one-size-fits-all mortgage options are the best option for you. Not only will you likely get a better mortgage rate with a broker, but you’ll also likely find a better structured mortgage that fits your exact needs.
Want to learn more?
Get in touch with Mike and Mindy today.