Securing the best mortgage rates in Canada can save you thousands of dollars over the life of your mortgage. Whether you’re a first-time homebuyer or looking to refinance, getting a low rate should be a priority. Here are the top five tips to help you land the best mortgage rates in Canada.
1. Improve Your Credit Score
Your credit score plays a significant role in determining your mortgage rate. Lenders view borrowers with high credit scores as less risky, often rewarding them with lower rates. To boost your credit score:
- Pay bills on time.
- Reduce outstanding debts.
- Avoid opening new credit accounts before applying for a mortgage.
A credit score of 700 or above can help you secure the best mortgage rates.
2. Shop Around and Compare Lenders
Not all lenders offer the same rates, so it’s essential to shop around. Different banks, credit unions, and online lenders may provide varying rates and terms. By comparing multiple offers, you can find the lender that offers the best deal.
3. Consider a Larger Down Payment
The size of your down payment can directly impact your mortgage rate. A larger down payment reduces the lender’s risk, potentially leading to a lower rate. If possible, aim to put down at least 20% of the home’s purchase price.
4. Opt for a Shorter Loan Term
While longer-term mortgages offer lower monthly payments, shorter terms generally come with lower interest rates. If you can afford higher monthly payments, consider a 15-year mortgage instead of the traditional 25-year option. This not only saves you on interest but also helps you build equity faster.
- Example: A 15-year mortgage typically has lower rates than a 25-year mortgage.
5. Lock in Your Rate
Mortgage rates can fluctuate, so if you find a rate you’re happy with, consider locking it in. A rate lock ensures that you’ll keep the agreed-upon rate for a specified period, typically 30 to 90 days. This can protect you from potential rate increases before your mortgage closes.
Conclusion
Securing the best mortgage rates in Canada requires preparation and a strategic approach. By improving your credit score, shopping around, considering a larger down payment, opting for a shorter loan term, and locking in your rate, you can significantly reduce your mortgage costs. Remember, every percentage point saved on your mortgage rate can translate into substantial savings over time.