Understanding Mortgage Rate Pricing
Getting the best possible mortgage rate can save you tens of thousands of dollars over the life of your loan. But many borrowers don’t realize that rates aren’t fixed numbers posted on a wall somewhere. They’re negotiable, and understanding how they’re set can help you secure a better deal.
Factors That Affect Your Rate
Your Credit Score
Your credit score is one of the biggest factors in determining your rate. Scores above 760 typically qualify for the best rates. Scores between 680 and 759 are still good but may pay slightly more. Below 680, options become more limited.
Your Down Payment
Larger down payments generally mean better rates. If you’re putting down 20% or more, you avoid mortgage default insurance and often get access to slightly better pricing.
The Type of Property
Owner-occupied homes typically get the best rates. Rental properties and second homes may have slightly higher rates due to perceived higher risk.
Your Debt Ratios
Lenders look at what percentage of your income goes to housing costs (GDS) and to all debts (TDS). Lower ratios can result in better rate offers.
Strategies for Getting a Better Rate
Work with a Mortgage Broker
Mortgage brokers have access to dozens of lenders and can shop your application to find the best rate. Banks can only offer you their own products. We can show you what’s available across the entire market.
Compare More Than Just the Rate
The lowest rate isn’t always the best deal. Look at the prepayment privileges, penalties for breaking the mortgage early, and portability options.
Time Your Application
Rate promotions are common at certain times of year, particularly in early spring. Getting pre-approved locks in your rate for 90 to 120 days.
Negotiate at Renewal
If you already have a mortgage and your term is coming up for renewal, this is one of the best opportunities to improve your rate. Banks count on the fact that many borrowers simply sign and return their renewal offers without negotiating.
Don’t be one of those people. Your bank’s first renewal offer is almost never their best rate. Before you sign anything, give us a call. We’ll tell you what rates are available in the market and help you negotiate.
Get Your Best Rate with Mortgage Oakville
Getting the best mortgage rate takes some effort, but the savings are substantial. And you don’t have to do it alone. Call us at 416-822-7357 for a free consultation. We’ll show you what rates you qualify for and help you make the choice that’s right for your financial future.