How to Get the Best Mortgage Rates in Canada

How to Get the Best Mortgage Rates in Canada

Did you know that according to a poll taken by HSBC, Canadians, when compared to 10 countries, are actually least likely to search for the best mortgage rates in Canada when they head out to become homeowners? This is quite surprising information for a country that is very well-known for its reward programs and discounts!

Are you one of these Canadians who would blindly take the mortgage rate that they first set eyes on? If you’re reading this guide over how to get the best mortgage rates in Canada, then that’s probably very unlikely; hence, we can begin talking about the measures one can take to learn how to get the best mortgage rates in Canada. 

When hundreds of thousands of dollars are in the question, you would be able to save a pretty penny if you take the time out and figure out how to get the best mortgage rates in Canada before settling for the first rate offered to you. Interest rates are hiking up, and choosing the best mortgage rates has now become a very crucial decision to make.

So, it doesn’t matter if you’re new to the housing market and are taking up your very first mortgage. Even if you already have a mortgage and are looking for better rates, or if your mortgage is up for renewal. Whatever your situation is, it would be quite beneficial for you to understand how to get the best mortgage rates in Canada – let’s move on and discuss more about it!

Become an ideal client for banks

Be it credit unions or banks, it’s their job to lend people money; learning how to be a good client for them is the way to understand how to get the best mortgage rates in Canada.

And while they may have quite a lot of it, they don’t offer it to just anyone that comes up to them and asks them for a loan. Banks and credit unions will only offer you the money if they believe that you’re a trustable client.

Plus, bankers will give you the loan if they believe that giving you the wads of cash that you’re asking for is worth taking a risk. Through strict guidelines and experience, bankers can understand if they should take you up as a client and give their money on the basis of a good risk. An ideal client should essentially have a source of income that is good enough to pay back the loan that he is taking. Not only this, but bankers also look for stability in the person and if you’ve stayed with your employer for quite some time and don’t change houses too often, you might be safe. Knowing this fact will help you learn how to get the best mortgage rates in Canada.

You may also attract the bank by explaining to them the prospects of taking you in their business. For example, if you believe that in the near future you may want to invest in a new car or buy a new house for yourself, you need to tell that to your banker so that they may see potential in developing a strong relationship with you as their client. This is probably the easiest way to learn how to get the best mortgage rates in Canada.

Build a good credit report

If you want to know how to get the best mortgage rates in Canada, know that a very simple and straightforward part about it is keeping a satisfactory credit history.  A decent credit report will be one of the first few demands your bank or credit union will make from you, so keeping a good report is essential if you want to get good mortgage rates.

One way to refine your credit report is by ensuring that there are no errors in it. According to a study, at least 25% of credit reports include errors that may come in the way of achieving loans on good rates. Foolish errors hindering you from getting low mortgage rates is probably the worst mistake that you can overlook before handing over documents to your banker or credit union. There may be errors like old credit accounts that you assumed were closed, but they are still reporting as open – this is very important to consider if you want to learn how to get the best mortgage rates in Canada. Upon finding such errors, you should contact the financial institution that is reporting the information or directly reach out to the credit bureau agency.

Credit reports may also consist negative information that may make you look like an unattractive client for the bank or credit union. There may be unpaid collections or late payments on your credit report, but you can fix these mistakes. For example, if there is a mention of late payments or bankruptcy on your credit report, you can wait for some time and show that you are now being responsible while managing your credit and then request that these get removed from the history.

To know how to get the best mortgage rates in Canada, understand that it is also very important for you to show that you pay your bills on time. There will be no banker out there who would want to take up on a client who has to be called every time to request for overdue payments. As you take up debts, make sure that you are paying them back as well. Even if there are a few reasons why you have made late repayments, they must be valid reasons and can be justified. This information is key if you want to learn how to get the best mortgage rates in Canada.

Bankers may also find your application quite unattractive if you have been applying to a bunch of other banks; this may show them that you are not looking to build a relationship with them and may move on to another company quickly, because you may just be rate shopping. Other than that, they may consider why other banks are rejecting your application. For this reason, either shop for rates without filling applications or stop applying to banks when two credit unions or banks have already rejected your application.

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Why should you get the best rates?

Ask yourself the question above because your banker will have only this one thing in his mind as he considers whether to take you up as his client or not. Not only that, but he will also think about the same question when he decides what rate to offer you. Bankers and credit unions are basically made to make money, so if your banker provides you with a good mortgage rate, then he should be able to tell his superior why he did so.

Keep this in mind when you learn how to get the best mortgage rates in Canada: bankers are looking for clients who will take all of their borrowing, investing, deposits, and insurance from them. If you are serious about it, convey that to your banker so that he can give you a discount today in order to secure you as his client for the future as well.

Knowing how to get the best rates in Canada also means that you know how to keep a good credit score. This point is already discussed above, and it plays a very important part in convincing your banker that he should give you his best rate. Banks may also consider you as an important client if you have a connection to that bank – for example, maybe you have plenty of family members owning accounts in the bank or taking up loans from them. The bank wouldn’t want you to say anything negative about them to existing clients, and this scenario will also be true in the event that you are an employee of a client company.

If you are a person of influence or are connected to many people, then a bank or credit union will also want to establish a good relationship with you in hopes that you will refer their bank/credit union to your connections. If you’ve banked there for some time and have also send in referrals, then the bank might also help you out with low mortgage rates.

Other than that, in order to learn how to get the best mortgage rates in Canada, you must also know that banks will prefer existing clients over new clients. If you’ve been banking with them for quite some time and have remained loyal, then this factor alone could help you out greatly when you figure out how to get the best mortgage rates in Canada.

Final words

Other than the things mentioned above, you can also shop around if you want to find out how to get the best mortgage rates in Canada. Check multiple banks and credit unions and see what types of rates they’re offering, and this will heavily depend on certain factors. You need to ask the bank about what these factors are, and if you don’t qualify yet, work towards it! Don’t lose hope – it’s very straightforward to learn how to get the best mortgage rates in Canada.

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FAQs about
Mortgages

Should I apply for a mortgage?

If you plan to buy a house and cannot afford to pay for it in cash, you should consider applying for a mortgage.

Obtaining a mortgage to buy a house means that you will not be liable for the total cost of the property upfront. You will be able to pay for the house in small amounts over a set period, typically 20 years, with interest.

It is worth noting that when you get a mortgage, the property serves as collateral for the loan. Therefore, if you default on your mortgage, your lender has the right to seize the collateralized property.

How do I apply for a mortgage?

First, you should determine the type of house you want to purchase, then find a lender through the Comparewise online portal that best suits your needs.

The lender will ask you to complete specific paperwork and will request documents from you for submission with your application.

Once all the necessary information has been submitted, you will need to wait for the lender’s approval.

What are the minimum requirements to qualify for a mortgage?

While the minimum requirements to qualify for a mortgage vary from lender to lender, the common conditions include proof of a steady income and a credit score of 600 and above.

There are exceptions to these requirements, however, if you are self-employed or have a credit score below 600. You should, therefore, ask lenders about their requirements and obtain more information on how to increase your chances of qualifying for a mortgage.

Why should I use a mortgage payment calculator?

A mortgage calculator can provide an overview of how much you need to pay monthly with any rate, which can help you see your financial situation accurately.

Are mortgage payment calculator free?

Yes. Most mortgage payment calculators are free.

May 5, 2021
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