Mortgage rates (including the best available mortgage rates!) are very much dependent on the overall profile of the borrower, and luckily for you, you’ll much control over the factors that help qualify under the best mortgage rates. Without the necessary guidance, it may be hard to understand what it is you can do to obtain the best mortgage rates, but here is a simplified guide that will help you qualify for the best rates when finally seeking out a mortgage for your purchase/refinance. “May the force be with you!”
Better your chances for the best mortgage rates by practicing the following:
- Credit (Make sure you maintain good credit): This one is a no-brainer, and most people are already aware of this. Now, banks use what we refer to as a ‘sliding scale’ to determine the borrower’s qualification for mortgage rates. The higher your score (680+) the better your rate options and the lower your score (<600) the higher the rates go… and of course there’s everything in between. Credit is a lengthy topic on its’ own so either seek out the tips you need by calling us, or you can refer to our credit blogs for further details.
- Amortization (Choose 25 year amortization IF you can as a way of exploring the best mortgage rates): This one is a fairly new topic of discussion. Of course there are options for 25 or 30 year amortization (depending on down payment), but by exercising the 30 year option (even though this helps lower your mortgage payment), there may be a small premium added to your rate. To take advantage of the lowest mortgage rates, you would ideally need to choose nothing greater than a 25 year amortization.
- Loan to value (Plan for loan to values <65% or >80% for the best options for mortgage rates): This topic is a bit hard to discuss with a definitive answer. Loan to value is very case specific and depends on how much of a down payment you’re providing if you are buying, or how much of a loan you’re seeking if you are refinancing. The mortgage rates will change depending on how high the loan to value is and whether the major default insurers are involved. Again, your case will be very specific to these factors and it’s important to discuss further with us. Nonetheless, loan to value is a factor in determining the best mortgage rates.
- Income (Strategically plan for provable income (ex. declare more income on taxes) for the possibility of better mortgage rates): Sometimes, the nature of an applicant’s income may not be as straight forward as a ‘full time, salaried employee’. In circumstances where exceptions need to be made on income, an applicant MAY (not necessarily a guarantee) fall into a category of lending where mortgage rates are priced higher (ex. Stated income, New to Canada, etc.).
- A vs B lending (Know your overall profile to better understand which route you’ll need to explore for mortgage rates, and set your expectations based on this): ‘A’ banks will always offer the best mortgage rates (the ones you see advertised at every corner… on every commercial) while ‘B’ banks mortgage rates will always be priced higher. Now it’s a matter of which branch of lending your mortgage request falls under (based on all of the above criteria) and what the best mortgages rate available are, through those channels. Knowing how to plan for this requires a longer term strategy.
Overall, there are many factors in your control that will help you get the best mortgage rates given your specific scenario. Though, it’s not uncommon to get fixated solely on getting the best mortgage rates while neglecting other areas of your mortgage decision. We’ll help sort out all avenues of the mortgage process with emphasis on getting the best mortgage rates… after all it’s our best interest!