5 Tips For Getting The Best Mortgage Rate

5 Tips For Getting The Best Mortgage Rate

1. If you are purchasing a home, put less than 20% down. Your mortgage rate is influenced by the risk to the lender. When you put less than 20% down on the purchase of a home, you are forced by the Canadian government to pay for mortgage default insurance (CMHC, Genworth, Canada Garanty). When your mortgage is insured, the risk to the mortgage lender is greatly reduced and you get the absolute best mortgage rates.
2. If you are purchasing a home, you can also reduce the mortgage lender’s risk by putting a large down payment. If your downpayment is 35% of the purchase price (or more), you can get mortgage rates similar to if you have paid for insurance (see #1).
3. If your mortgage is renewing and you are transferring the mortgage to a new lender, this is called a switch. You will get the best rate depending on how much equity is in the home.
4. Speak to a mortgage broker. If you walk into a bank, they will test your knowledge and offer you a higher mortgage. A broker has access to many banks and can get them to bid against each other for your business. Knowledge is power!
5. Have good credit. This should actually be #1 in the list because none of those options apply unless you have good credit. Bad credit increases the risk to the lender. As discussed above, increased risk means higher rate!

Now go out and get the best mortgage rate!!