Securing a mortgage loan is a significant financial decision that requires careful consideration. One of the most critical factors to consider is the interest rate on your mortgage loan. A lower interest rate can save you thousands of dollars over the life of your loan, so it’s essential to do everything you can to secure the best mortgage loan rates possible. Here are ten tips to help you secure the best mortgage loan rates in Canada.
- Improve Your Credit Score
Your credit score is one of the most important factors that lenders consider when determining your mortgage loan rate. The higher your credit score, the lower your interest rate is likely to be. To improve your credit score, pay your bills on time, keep your credit utilization low, and avoid applying for new credit.
- Shop Around for Lenders
Different lenders offer different mortgage loan rates, so it’s important to shop around and compare rates from multiple lenders. Consider working with a mortgage broker who can help you compare rates from different lenders and find the best deal.
- Make a Larger Down Payment
Making a larger down payment can help you secure a lower mortgage loan rate because it reduces the lender’s risk. Aim to make a down payment of at least 20% of the property’s purchase price to avoid mortgage loan insurance premiums.
- Consider a Shorter Loan Term
A shorter loan term can help you secure a lower interest rate because the lender assumes less risk. Consider opting for a 15 or 20-year mortgage loan instead of a 30-year mortgage loan.
- Choose a Fixed-Rate Mortgage Loan
A fixed-rate mortgage loan has an interest rate that is fixed for a set period, typically 5 years. This type of mortgage loan can help you secure a lower interest rate because it offers the lender more stability.
- Consider Paying Points
Paying points, also known as discount points, is an upfront fee you can pay to lower your mortgage loan rate. Each point typically costs 1% of the total loan amount and can lower your interest rate by 0.25% to 0.5%.
- Avoid Making Major Purchases Before Applying
Avoid making major purchases, such as a car or furniture, before applying for a mortgage loan. These purchases can increase your debt-to-income ratio and reduce your chances of securing the best mortgage loan rate.
- Get Pre-Approved for a Mortgage Loan
Getting pre-approved for a mortgage loan can help you determine how much you can afford to borrow and give you an advantage when negotiating with lenders. It can also help you secure a lower interest rate.
- Consider a Co-Signer
If you have a lower credit score or a high debt-to-income ratio, consider getting a co-signer for your mortgage loan. A co-signer with a strong credit score can help you secure a lower interest rate.
- Be Prepared to Negotiate
Don’t be afraid to negotiate with lenders to secure the best mortgage loan rate. Consider working with a mortgage broker or financial advisor who can help you negotiate with lenders and find the best deal.
Conclusion
Securing the best mortgage loan rate in Canada is critical to save money over the life of your loan. By following these ten tips, you can improve your chances of securing the best mortgage loan rate possible and make an informed decision about your mortgage loan.