Picking a mortgage is a formidable task for most people, especially since the financial trends have changed so rapidly over the past several years. However, if you can understand what makes a mortgage right for you and how to go about finding it, you’ll be in a better position to negotiate the contract that you want.
Mortgage lending is a science.
This means that unfortunately for you, you will probably be just a number to many lenders instead of a name. One of the other downsides of mortgage lending is that there is a strong possibility that the mortgage you sign now could change hands several times throughout the length of the contract. However, you can use this knowledge to your advantage by making yourself available to the lender with the best deal. This means that you don’t necessarily have to go with the mortgage that your bank would offer you out of sheer customer loyalty. In fact, it’s best to shop around to see what else is out there. Start with a preliminary search of mortgage rates with ratesupermarket.ca so that you have an idea of what the home lending market is like at the moment.
There are several types of lending institutions that handle mortgages. In addition to your bank, you can also contact credit unions and mortgage companies that deal exclusively with home financing. No matter which kind of lender you work with, be sure that you are signing a contract with a lending officer instead of a broker; brokers often work on commission, which means that you would pay additional fees that you could avoid elsewhere.
Your interest rate is negotiable.
Many people feel like they have no control over what interest rate is set for them, but this is rarely true. After you research mortgage rates in Canada with ratesupermarket.ca, there are several ways to make sure that you get a lower interest rate, but the most sure-fire of all is to have a great credit report and a low level of debt. Lenders often see this as an indicator of how much of a financial risk you are, so practicing good money management will set you up for the best mortgage deal possible.
Going hand-in-hand with money management, saving up enough to make a significant down payment (between ten and twenty per cent) is another good way to lower your interest rate. This will also lower the amount of interest you pay in all, since it will shave years off of your mortgage contract.
Depending on your needs and future plans, an adjustable rate mortgage may also be an effective way to save money on the interest of your home loan. ARMs usually start of relatively low, but you agree to such a contract with the understanding that the interest rate will change after a certain period of time, which means that you could pay more. However, if you anticipate that you will need more space or that you will want to relocate before that adjustable rate takes effect, you can avoid it by selling your house.
When it comes to interest, you can also save by pre-paying on your interest at the time that you purchase the home. An interest point is usually equal to one per cent of the home’s total cost, and buying them upfront is a good way to make sure that you lower your overall expenses over the length of your mortgage term.
Follow these tips, and you can get the home of your dreams and the mortgage of your dreams, too.