Finding the Right Mortgage Rates

By: Brandon Weiss & Mark Adelson

Finding the Right Mortgage Rates

Tags: Toronto, Real Estate, House Prices, Spring, 2021, Update, Investment, Investing, Property, Mortgage, Rates

If you are looking to jump into the housing market, one of the first steps you will need to do is to get preapproved for a mortgage. Getting preapproved will not only help you to understand how much home you can afford, but it will give you a competitive advantage over buyers who haven’t been preapproved. In today’s competitive market, sellers don’t want to wait around to see if you can get your financing – they are going to sell to someone who already has it.

But how do you know if you are getting the best rate on your mortgage? Interest rates are low right now, but they can still vary from lender to lender. And they can still vary depending on the type of mortgage you get.
Here are a few tips to help you get the right rate for you.

Work with a broker
Although you can probably go down to the local branch of your financial institution to get a mortgage, you may not be getting the best rate or mortgage for you if you do so. Mortgage brokers work with dozens of different lenders, so it is easy for them to shop around on your behalf to find you the best rate. This is a preferable method of mortgage shopping than doing it yourself for the simple reason that if you shop different lenders on your own, each one may have to run a credit report – and this can hurt your credit at a time when you can least afford to do so.

When you work with a mortgage broker, only one credit check needs to be done for them to compare the offerings of many different lenders on your behalf.

The interest rate that you are offered by a lender will depend on many factors including:

Types of interest
When you apply for a mortgage, you not only have to consider the exact interest rate, but also the type of interest including fixed, variable, and hybrid options.

Fixed interest rate
This is the most popular type of mortgage among Canadians. A fixed-rate will stay the same for the entire length of the term. So, it’s a good option if rates go up, but becomes less advantageous if rates go down.

Variable interest rate
With a variable rate mortgage, your interest payments will rise and fall with the bank rate. You will have the option to keep your payments the same (paying down more or less of your principal depending on the interest rate) or you could choose to have adjustable payments as the rate changes. Some variable-rate mortgages are convertible, however – so you can change them to a fixed interest if you think that rates are going up. You should ask your lender if their variable rate mortgage has this option. 

Hybrid interest rate
With a hybrid, or combination interest rate, you have a portion of your mortgage that is fixed, and a portion that is variable. This allows you some of the advantages of both fixed and variable rates, but because each portion of your mortgage may have different terms, you may find it more difficult to switch to another lender.

Contact Mark Adelson or Brandon Weiss

If you have been preapproved for a mortgage and are looking to purchase a home in the Toronto area, we can help you find your ideal spot. And if you have not yet been preapproved, we would be happy to recommend a mortgage broker who can assist you and find the right mortgage rate for you.