8 Strategies to Secure a Lower Mortgage Rate

8 Strategies to Secure a Lower Mortgage Rate

According the the Canada Mortgage and Housing Corporation, the majority of mortgage borrowers opted for  variable over a fixed interest rate. Variable mortgages are typically pegged to the lender’s prime rate, which means they are immediately affected by rising interest rates. Many homebuyers are finding it increasingly difficult to afford or even qualify for a mortgage at today’s elevated rates. Here are a few steps you can take to strengthen your position if you have plans to buy a home or renew an existing mortgage.

1. Raise your credit score
   • A lender will view you as “less risky” and offer lower interest rates. If your credit score is low, take steps to improve it, like paying down revolving debt and making all future payments on time.
2. Keep steady employment
   • When you apply for a mortgage, lenders will review your employment and income over the past two years. A stable employment history gives lenders more confidence in your ability to replay the loan.
3. Lower your debt service ratios
   • If your debt payments are consuming too much of your income, you may have trouble passing a mortgage stress test. Consider paying down your credit cards and auto loans.
4. Increase your down payment
   • Borrowers with significant equity in their home are viewed as less likely to default on their mortgages from lenders. This is part of the reason lenders ask for mortgage default insurance when less than 20% is put down.
5. Weigh interest rate options
   • Not all mortgages are created equal. With fixed-rate mortgages, you’re guaranteed to keep the same interest rate for the entire life of the loan. The interest rate on variable-rate mortgages will rise or fall along with your lender’s prime rate.
6. Compare loan terms
   • A mortgage term is the length of time your mortgage agreement is in effect. A shorter-term mortgage (5 years or less) will typically feature a lower interest rate than a longer-term mortgage.
7. Get quotes from multiple lenders
   • When shopping for a mortgage, be sure to solicit quotes from several different lenders or brokers to compare the interest rates and fees.
8. Ask for a discount
   • When shopping for a mortgage, don’t be afraid to negotiate. In Canada, it’s commonplace for lenders to discount their advertised interest rates, which are called posted rates. And in many cases, all you have to do is ask. Your strength of application will come into play here.

Stephanie Harder – Realtor®
Coldwell Banker Signature
306-241-1000
stephanieharderhomes@gmail.com