Guide to Getting Canada’s Lowest Mortgage Rates
When buying a home, most Canadians will need to borrow money from a lender. Home buyers will spend a major part of their life paying off the loan and the interest.
Your mortgage interest rate is very important as lowering your interest rate by even 1 or 2 points will save you thousands of dollars.
A number of factors are used by lenders in Canada to determine if you will qualify for a mortgage and what interest rate you will pay. To get Canada’s lowest mortgage rates, you will need to meet a lot of the lender’s requirements.
Criteria to qualify for Canada’s Lowest Mortgage Rates
Credit score: The higher your credit score, the lower will be your mortgage interest rate. If you make a bigger down payment, you may qualify for Canada’s lowest mortgage rates even with an average credit score.
Employment and income stability: Lenders prefer borrowers who have had a steady job for 2 years. Unemployment, declining earnings and self-employment are not good when applying for a mortgage. Self-employed persons will require submitting their tax returns to obtain a home loan.
Down payment: A down payment of 20% or more is the best way to get the lowest mortgage rate. If your down payment is less than 20%, you may have to pay mortgage insurance.
Cash Reserves: For the purpose of a mortgage, cash reserve is measured as the number of months’ worth of mortgage payments you have in savings. The standard requirement is 2 months.
Debt-to-income ratio: Your monthly minimum debt payments including mortgage payment divided by monthly income is your debt-to-income ratio (DTI). Lower DTIs may result in lower mortgage rates.
Finding Canada’s Lowest Mortgage Rates
Comparison shopping is one of the ways to save money and get best mortgage rates. Rate comparison sites let you compare mortgage rates from a variety of lenders in just a few clicks. After you enter information such as loan amount, type of loan, etc., the comparison tool will show you a list of lenders with Canada’s lowest mortgage rates for you.
Your bank or credit union may give you a lower rate than what is offered to the general public. You may even qualify for discounted rates if you meet some of their criteria.
A mortgage broker can help you find Canada’s Lowest Mortgage Rates given your financial situation. They can help you get a mortgage that banks are not willing to offer.
Applying for a mortgage is a complicated process. You need to research and do your homework on various aspects of a mortgage before you apply for one.
Search all the major rate comparison sites as available lenders and deals listed vary from site to site. In addition to mortgage rate, you should look into portability, refinance restrictions, penalties, etc.
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