Getting a good mortgage rate is essential. Having a low mortgage rate in Toronto can save you thousands of dollars, no matter your goals. Here are some ways that you can secure a low mortgage rate on your next application.
Improve Your Credit Score
A strong credit score is essential to getting the best terms and lowest rates. The higher your credit score is, the more a lender will want to work with you. Your credit rating demonstrates your responsibility with money. If you have a poor history of not paying your bills or you have high credit card debt, you’re not likely to be offered great mortgage rates.
If you have a low credit score, the good news is you can do something – or a lot of things – about your credit score. Start by paying your debt down. Build a history of paying your bills on time. And check your credit rating regularly. If you notice any errors, report them right away and follow up to see they’ve been corrected.
Another step you can take to improve your chances of getting a low mortgage rate is to develop a strong employment history. Lenders like to see you have at least two years of steady employment. And be sure you have the documentation to back it up. That includes pay stubs and any bonuses or commissions that you earn. It may take a little more effort to demonstrate a strong employment history for self-employed people, but it’s not impossible. It would be a good idea to talk to your mortgage broker as they understand which lenders will work with you and which ones won’t.
Large Down Payment
The more you can put towards the down payment, the less you’ll need to take out for a mortgage. It can also help you get a better rate on that mortgage. Moreover, if you’re able to pay more than 20 percent as a down payment, you’ll also be able to avoid paying mortgage insurance. This is insurance that you pay and offers protection for your lender if you default on the loan.
You don’t need to take the first offer you’re given. As a home buyer, you can ask different lenders to provide you with a quote that includes the rate they’re willing to offer. You can also use this information to negotiate with a lender. If their first quote is not as low as others, ask them if they are willing to reduce it to stay competitive. If they say no, you can choose to work with another lender.
If you’re a first-time homebuyer in Canada, you may be able to get some government money to help you purchase the property. The First-Time Home Buyers Plan can help you reduce your monthly mortgage payments, making it more affordable for you to get that home.
If you are interested in learning more about your mortgage options in Ontario, call Northwood Mortgage™ at 888-492-3690 or contact us here.