Finding the best mortgage rate for Ontario real estate for sale is on the the top of many Ontarians’ minds. With the cost of living in Canada currently at a peak, it comes as no surprise that several people are looking for ways to cut back on their expenses. This is especially true for homeowners who bought a property that would’ve been out of their price range during the pandemic lows. To help you get the best mortgage rate for your home, we have put together a list of tips. Follow along below to learn more!
Tips for Finding and Acquiring the Best Mortgage Rate
- Do Your Due Diligence
In order to scope out the best mortgage, you need to do your research. The first step in your research process should be to consider your financial needs and goals. Once you have a clear idea of what these look like, you’ll have a greater understanding of what kind of mortgage you want to find. At this time, you should also look into the current market and see where interest rates are at. Doing so will give you an estimate of what the average lending cost will be and how it might change in the near future.
- Improve Your Credit Score
Another way to help yourself get a better mortgage rate is to improve your credit score. While it may seem obvious, many homebuyers are quick to throw out this solution because it often takes time to see results. Despite this, improving your credit score can be done with a few simple steps. For example, making larger payments on outstanding credit card bills, paying off any collections on your report, and keeping your outstanding balance on your credit card(s) low.
- Pay Off Debt
To get the best mortgage rate, lenders will examine your debt-to-income ratio to assess your risk for borrowing money. Most mortgage lenders use two main ratios to decide if a borrower is able to afford the loan. These ratios are the Gross Debt Service (GDS) and the Total Debt Service (TDS). Your GDS is the percentage of your monthly household income that covers your housing costs. The CMHC recommends that this does not exceed 39%. On the other hand, your TDS is the percentage of your monthly household income that covers your housing expenses and any other debts. The CMHC advises that this does not go over 44%.
More Advice to Consider
- Make Sure You Have Stable Income
Having a stable source of income is a critical part of qualifying for a great mortgage. Lenders want to know that you have a steady flow of cash coming in monthly. For lenders, the greater your income stability, the less likely you are to default on your payments. In order to improve your income stability, first evaluate the amount you spend vs. the amount you make per month. Then, determine where you can cut down on spending and where you can afford to make more.
- Save for a Greater Down Payment
This tip is only applicable for those who are buying new, however, it’s worth noting that saving for a larger down payment will help you acquire a better mortgage rate. By putting more down on your home, you minimize the amount you need to borrow. This can make you more attractive to lenders and ultimately contribute to your success in getting a lower interest rate. In general, saving for a down payment that is 20% or greater will ensure that you receive a more favourable interest rate.
- Shop Until You Drop
When making any large purchases or financial commitments, it is important to shop around. After all, you don’t want to get stuck with a mortgage that doesn’t suit your financial situation. To ensure that you get the most suitable mortgage, make a list of potential lenders and see what each one has to offer. Evaluate them based on the rate they give you, the term and conditions, and the amount of flexibility you will have. When it comes time to choose one, pick the lender that best fits the goals and needs you outlined in tip number one.
Contact us About Ontario Real Estate for Sale!
Acquiring a mortgage for Ontario real estate for sale can be challenging! If you have any questions about what you read, or a property in the area, contact us today. Discover more information on buying and selling in London, when you reach out to one of our trusted team members. Be sure to check out our Instagram page for the latest updates and more. We’d be happy to help you find an awesome property in Ontario. Feel free to reach out to us at any time, we look forward to working with you soon!