For people looking to buy a home in Ontario, finding the lowest possible rate is probably a priority. However, your rate is largely determined by which bank you obtain the loan through. Because of a general lack of knowledge when it comes to mortgages, many borrowers find themselves settling for higher rates than necessary. If you’re interested in getting the lowest fixed mortgage rate possible, read on for some tips that will help you during the application process.
1. Don’t put out too many applications. Instead, find your bank or broker and then submit one application. You can talk to banks and compare rates and services without signing applications or credit check consent forms. Make sure you don’t give anyone the go-ahead to pull your credit before you’ve made a decision on a lender. Different lenders or brokers have access to different rates, so do your homework before signing anything. Remember, every time your credit is pulled, it puts a ding in your credit that can cost you a fraction of a percentage point on your final deal.
2. Don’t choose a collateral loan unless the rate is significantly lower. A collateral mortgage uses some valuable object to secure the loan. If you default, the valuable object becomes the property of the bank to satisfy the debt. Most banks just refer to a collateral loan mortgage as “a mortgage,” so it’s easy for borrowers to be duped. What you should know is that if your mortgage is a collateral loan you will wind up paying more interest, have more risks, and you’ll have to pay a legal fee when you switch to another lender or when the mortgage matures.
3. Matching rates are just a gimmick to close a loan. It’s a sure sign that the company you’re working with is trying to get a higher profit from your deal. Remember, if they’re trying to get more money out of you in the initial rate, the odds are that there are other parts of your loan that they’re trying to pad with a few extra costs as well.
4. Remember that your real estate agent gains something if you go with the company they refer you to. They’re likely getting paid by the mortgage company the recommend as a referral fee. The referral fee is usually added to the cost of the mortgage in the form of higher rates.
5. Don’t assume bigger is always better. Most of the mortgage specialists working in the big banks are unlicensed, so there’s no place to complain to if you have problems with them. For a licensed broker or an agent who’s licensed in a smaller bank, however, there is a provincial organization called the FSCO that manages the brokers and agents. If you have a problem with them, you can complain to the FSCO and have it resolved.
When shopping for a new fixed mortgage rate Ontario, these five tips will help you get the best deal possible. Remember that lower rates are nice, but ultimately you’ll want to find a bank that you can have a long-term relationship with. Do your homework and you’ll soon find a company you feel good about borrowing money from. Click the link below for quotes on fixed mortgage rates Ontario.