When applying for a new mortgage, many Canadians simply go to their nearest bank and apply for pre-approval. This is not to say that this act is wrong, but doing research and finding the best deals for your new mortgage can not only save you money, but a lot of headache and time later on.
When getting a new mortgage, there is much research that needs to be done. In order to get the best deals on interest rates, and to decide if you want a variable rate or a fixed rate new mortgage, you should look at many different lenders. Always start with your personal banking lender, as you will have a history with this bank or credit union. This sometimes has a bearing on how easily a lender will work with you, even with less than perfect credit. However, if you have perfect credit, you should have no problems finding a lender to work with as they will offer you the best rates they have available.
If you have less than perfect credit, it is in your best interest to search for lenders that deal with persons who have your type of credit history. Get a copy of your own credit report and credit score when searching for a lender. If your credit score is less than 650, you may have a hard time getting approved for a new mortgage, as you are considered a credit risk to lend to. There are however, businesses that deal specifically in new mortgages for those with credit problems or credit scores less than 650. You will not be able to get the lower interest rates that others are able to get, due to the credit score. But you will at least be able to get your new mortgage.
Look online for interest rates that fall within your means. This can help to save you time and energy looking for a lender by driving to each location, simply look at their website and find out what their regular posted interest rates are. Deciding which type of mortgage you want is important as well. A fixed rate mortgage means that your payments will stay the same throughout the life of the loan. This means that your first payment and your next to last payment will all be the same. The last payment is called a balloon payment, and is generally a bit larger or smaller than a normal payment. Fixed rate mortgages have the same interest rate throughout the loan, and it does not fluctuate with the economy. A variable rate loan or mortgage will vary monthly based on the prime rate set by the Bank of Canada, the economy as well as bonds and stock market failings or gains. Each of these affects the interest rate that you are charged each month on your regular payment. So if the principal of your loan payment each month is $575 and the interest rate goes up from the previous month’s rate of 4.8%, you will end up paying more this on this month’s payment than last month. However, the upside to this interest option is that when the economy is doing well, the payments are much smaller than those persons with a fixed rate mortgage.
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