Navigating Ontario’s Mortgage Maze: Key Strategies

In a landscape of fluctuating inflation and mortgage rates, finding the optimal mortgage rate in Ontario can feel like uncovering buried treasure. Let’s explore various strategies to help you secure the best mortgage rate for your needs in these challenging times.

Before diving into strategies, it’s essential to grasp the differences between the three primary types of mortgages.

The Bank of Canada has a breakdown definition of each type of mortgage:

• “Fixed-rate mortgages: The mortgage payments are fixed for the duration of the loan term. The principal and interest portions evolve according to a regular amortization schedule. At renewal, the interest rate is updated, and the payment is recalculated.”
• “Variable-rate mortgages with variable payments: The interest rate is updated each month following changes in the prime lending rate, which is assumed to move in step with the policy rate. The outstanding balance and mortgage payment are then recalculated each month using the updated interest rate and remaining amortization period.”
• “Variable-rate mortgages with fixed payments: The interest rate and the corresponding interest portion of the mortgage payment are updated each month in line with any changes in the prime lending rate. However, the mortgage payment itself remains the same unless the mortgage reaches its trigger point. At renewal, the monthly payment is recalculated to bring the mortgage back to its original amortization schedule.”

Many people today have the idea of simply buying a house and taking out a mortgage is simply terrifying. Though it can be a daunting task, we are here to help give you some tips for buying your house with today’s mortgage rates.

Though the prospect of purchasing a home and obtaining a mortgage can be a daunting task to some, we are here to help guide you through buying your house with today’s mortgage rates.

Saving Your Money to Increase Down Payment

This may seem like an obvious suggestion when thinking of purchasing a house but it is important to keep in mind the amount of your down payment. Though you can put down a lesser down payment it’s the general rule of thumb is to save at least 20% of the cost of your home as a down payment. The more money you put down for your down payment the less you have to borrow from the bank or another mortgage lender.

Build a Record of Employment & Increase Your Income

Having a constant employment record is a major factor when applying for a mortgage. If you have a steady employment record lenders are more confident that you won’t default on your mortgage payments and therefore are more likely to lend to you. On that note increasing your annual income is also beneficial, whether that be a side income, a pay increase, or another job. Having more of income to help pay for everyday life so you can put more towards either your initial down payment or to pay off the mortgage quicker is always a plus.

Improve Credit Score

Many people are told the better the credit score the easier it is for you to either lease or buy anything, whether it be a house or a car. Though if you want the best mortgage rate possible it’s best to have a great credit score. The reason for this is that if you can convince a lender that you are a minimal risk, you will score a low rate. Remember lenders are looking for clients who will repay their mortgages. If you stay within the 700-750 range your lender will feel more comfortable lending to you.

Shopping Around

It would be best if you always looked at all the different options when getting a mortgage or renewing a mortgage. Although the rates offered might be similar with the lenders even a slight difference can save you thousands of dollars. Also, if you are a first-time home buyer or downsizing looking on the government website or lenders’ website to see if there are incentives available is very important.

Know When to Negotiate Your Mortgage

Although the idea of negotiation can be quite intimidating. There are 2 important times when you can negotiate a mortgage and knowing them might make it less difficult.

• When getting a new mortgage – This is one of the best times to negotiate as multiple lenders want to land your business. Take the time to shop around or see if your preferred lender is willing to match or do better than the competition.
• When renewing your mortgage – Your current lender will send you a renewal letter a few months before your mortgage term ends. Instead of accepting the contract, take a look at what other offers are out there, as you could save big if you switch. This ties in majorly with shopping around continuously looking at what everyone offers.

Consider Interest Rates

Even if you are not looking to buy a house or are not in a current position to buy one, looking at the mortgage rates and keeping an eye on them is especially important. In today’s life when everything is always labelled “expensive” or “high cost,” it’s really important to know if that is true, and the best way to do that is to make sure you look at the interest rates yourself.

If you’re uncertain about interpreting the numbers and understanding market dynamics, seek guidance from an expert. Reach out today and we will help you find the best mortgage broker for you.

For quick, easy and informative updates on mortgages in today’s market, check out Samantha Powers on Instagram: @mortgages.with.power

The information in this blog is not legal advice, and its contents are not guaranteed or warranted.