The lowest mortgage rates in Canada are very much dependent on the overall profile of the borrower, and luckily for you, you’ll have full control over the factors that help you qualify for the best mortgage rates. Here is a simplified guide that will help you qualify for the best rates when purchasing a new home or refinance your current home. “May the force be with you!”
Better your chances of getting approved for the lowest mortgage rates by practicing the following:
- Credit: Make sure you maintain good credit. This one is a no-brainer, and most people already know this. 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. Credit is a lengthy topic on its own, so either seek out the tips you need by calling us or refer to our credit blogs for further details.
- Amortization: Choose nothing higher than 25-year amortization if you want the best mortgage rates available to Canadians: With most banks, you’ll be able to choose up to 30-year amortization (depending on the down payment), but by exercising the 30-year option, there is often a small rate premium added (even though a longer amortization helps lower your mortgage payments). To take advantage of the lowest mortgage rates available, you would need to choose an amortization equal to, or less than, 25 years
- Loan to value: The lowest mortgage rates are available for insured/insurable files (less than 65% loan-to-value, or greater than 80% loan-to-value). 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’ll need when refinancing. The mortgage rates will change depending on how high the loan-to-value is and whether the mortgage is default-insured. So, loan-to-value plays a role in determining the best mortgage rates in Canada.
- Income: Sometimes, the nature of an applicant’s income may not be as straightforward as a ‘full-time, salaried employee’. In circumstances where exceptions need to be made on income, an applicant might fall into a category of lending where mortgage rates are priced higher (ex. Stated income, New to Canada, etc.). So, income, (nature, source, and provability) influence getting approved for the best mortgage rates in Canada.
- A vs. B lending: ‘A’ banks will always offer the lowest mortgage rates (the ones you see advertised at every corner… on every commercial) while B-Lender 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 the above criteria) and what the best mortgage rates available are, through those channels. Knowing how to plan for this requires a longer-term strategy.
In conclusion, many factors and variables help you get the lowest mortgage rates in Canada. However, 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 an emphasis on getting you the best lowest mortgage rates… after all, it’s our best interest too! Call us now at (905) 455-5005 to get a quote for the best rates in 2o24.