Buying a home is one of the most significant purchases a person will ever make. The median home value in Canada is $68,987 according to Google search. Most of the people cannot afford to pay this much amount in one go; therefore, it is better to rely on a mortgage that is you can borrow money from the lender and pay it back with interest on the rate. This has become a necessary part of the home-buying process for those who are okay with borrowing money.
The terms of your mortgage matters considerably since the type of mortgage, interest rate, and length of time you have to repay can impact the total money you spend. Lower your rate by a certain percentage point or pay the mortgage off a few years and you will save thousands in interest throughout the loan.
A home purchase will be the most significant purchase completed in your lifetime. Therefore It is essential to shop around and make sure that the terms and conditions of the loan obtained will meet your needs.
Here are some ways to get the best mortgage rate:
Improve your FICO Credit Score:
A credit score is a valuable factor in determining the risk. A lender will use your credit score in deciding your ability to repay the debt. The higher the score, the higher will be the trust factor.
In short, the more confident the lender will be that you can repay on time and they can offer lower interests in such cases.
To improve your score, you must pay your bills on time. Eliminate those extra credit card bills. Keep a check on your credit card score and if you see any mistakes, get them correct before you apply for a mortgage.
Build a Record of Employment:
It acts as a green signal if you show lenders at least two years of steady employment and earnings, especially from the same company. But if you are self-employed or your pay comes from multiple part-time jobs, it will be challenging to qualify for a mortgage.
Save for a Down Payment:
You can lower your mortgage rate if you can provide at least 20 per cent for a down payment. Lenders do accept lower down payments, but it usually means you will have to pay private mortgage insurance, which can range from 0.05 per cent to 1 per cent of the original loan amount annually.
Consider an Adjustable Rate Mortgage:
An adjustable-rate mortgage is an option to consider, but the rate of interest increases after the fixed period ends and the rate readjust. Adjustable-rate mortgages are designed as short-term lending products. But it is definitely better than a 30 year fixed rate deposit.
Shop among Multiple Lenders:
Do the necessary research to make sure you are getting the best rate. Talk to multiple lenders, look beyond your bank or credit union and explore options online.