To get the most favorable interest rate on your mortgage plan, showing repayment ability is very crucial. This is because lenders are most likely to offer you a good mortgage interest rate if you demonstrate the ability to pay back.
You can prove to your lender that you can repay, by putting the following tips into consideration:
Deposit a significant amount of down mortgage Payment
Previously the standard amount for a mortgage down payment was 20%. However, that is not the case anymore as some lenders have started to offer different down payment rates on their mortgages some as low as 5%.
Not so long ago some changes were made on mortgage insurance guidelines. The new guidelines could make it harder to get such a small percentage down payment arrangement for mortgages.
Most banks will be eager to offer you a mortgage when you put a lot of money in your down payment. Lenders consider this a sign of having great financial ability.
The higher the amount of money you deposit as down payment, the more you are likely to receive a lower interest rate on your mortgage product.
Have all the information first
Get to know all the fees that you may be needed to pay to a broker if you plan to get one. It is advisable only to carry out a credit check after you have decided on the lender you are going to get your mortgage product from. Many credit checks can lower your credit score, which can reduce your chances of getting a reasonable interest rate from mortgage lenders.
Work on your credit score
A good credit score can go a long way in ensuring that you get a good mortgage product with a low-interest rate. There are a lot of different things you can do to keep your credit score reasonably good. For instance, paying your bills in good time. Also ensuring that your credit card balances are paid regularly enough, not after prolonged periods. Having a high credit score will mean that you will get better and lower interest rates.
Proof of good personal financial management skills will land you a better, lower mortgage interest rate. Most lenders do not like to risk non-repayment, so they always prefer to give mortgages to buyers who show they have good financial habits.
When shopping for a mortgage plan, you need to research thoroughly about the available lenders. Then pick a reputable mortgage lender.
To be prepared when shopping for a mortgage plan, get a qualified mortgage broker. The president of Dominion lenders, Gary Mauris, says that most people do not spend as much time as they ought to when preparing to pick a mortgage product. He advised that you should get a good broker that can explain to you all the details of the mortgages available. They should also be able to give you information to help you understand the most relevant legal information pertaining to the mortgage.
Give all the necessary documents like notice of assessment, your income details, employment letter, and your down payment details. This information will ensure that you only pick a mortgage plan that is ideally suited for you.
Look for more than just the interest rate
A great mortgage rate, Dale Bilton of Mortgage intelligence Kitchener, Ont, says, you need to get a mortgage product and a lender that meets your specific needs. He also says it’s important to get a lender that can work on changes in the period of the mortgage plan.
It is advisable to get all the information on open mortgage and closed mortgage. And to also understand the pros and cons of a fixed interest rate and a variable interest rate.
Fixed interest rate versus variable interest rate
A variable mortgage interest rate fluctuates through the time your mortgage plan lasts. However, the fixed rate is constant through the period that you agree with the lender.
Open mortgage term versus closed mortgage term
When you opt for a closed mortgage, you get low mortgage interest rates. However, the disadvantage is that you cannot prepay the mortgage before the maturity date on the agreement with your mortgage lender. In case you chose to prepay under this plan, a penalty is charged.
The open mortgage offers you a chance to repay your mortgage before the maturity date if you choose to without paying a penalty fee. You can also be able to transfer your mortgage when you pick this kind of mortgage plan.
In some cases, financial experts’ advice that a mortgage product with a higher interest rate and a flexible plan that suits your needs. Could be better than one with a low-interest rate and fixed terms.
Before you sign a mortgage plan take time to understand all the details of the agreement with your mortgage lender
Three important things to consider from the Mortgage Broker Vancouver BC – Maple Ridge Mortgage Broker – Commercial & Bad Credit at Community Lending Centre:
Interest rate Pre-approval;
This helps you to know how the highest amount mortgage interest rate you qualify for. The mortgage interest rate is kept that way for around 120 days. During this period when the interest rates go lower your rate also reduces. In case the interest rates increase you are assured of maintaining your low mortgage interest rate.
Give your mortgage broker the following details before you chose a mortgage plan;
a) Your income information
b) Latest paystub
c) Your down payment (if you are on a plan that requires one)
d) T1 tax summary
Having all this information will help the mortgage broker bargain the best available interest rate in the market. They will also be able to choose a mortgage product that is perfect for you.
Ask your real estate agent to put a “subject to financing” clause on your offer.
This is important as it gives you mortgage broker an opportunity to check, down payment CMHC approval of the property. You are also able to inspect the home. All this ensures that everything is in check and you can comfortably move into your new home.