How To Get The Best Rate On Your Next Mortgage

Mortgage Infographic

Getting a mortgage is probably one of the most stressful things you will do in your lifetime.  From shopping for lenders to providing financial, to navigating the maze of questions and double talk during the process, it will leave your head spinning.

No wonder most people don’t switch mortgage companies or refinancing despite knowing they can get a lower rate.  When the process is so painful, most people don’t want to subject themselves to it again if they can.

So if you are going to shop for a mortgage, then you should spend that time upfront and make sure you get the best deal you can.  You can use mortgage calculators to figure out what you can afford each month.

What are some factors when it comes to getting the best rate?

Credit scores.  Having good credit and a high credit score will open up a world of low-interest possibilities for you.  Even if your income isn’t very high, a solid credit score will help you push through other factors that may seen as limiting your low interest dreams.

Down payment. Lenders love when you have skin in the game, it reduces their risk in case of default.  Put 20+% down and you’ll find you will get a better rate offered to you.

Debt. Don’t carry a lot of debt in the months leading up to your mortgage application.  Just as important is your debt to income ration, if you credit cards are maxed out, lenders will look at you as a poor credit risk and increase the rate to protect themselves.

Points.  A simple way to lower you rate is to pay points up front.  Usually, you will get rewarded with a lower rate if you pay some points upfront.  So if you have your 20+% down payment covered and still have cash lying around, consider buying down your rate with points.

When we purchased an investment property last year in northern Ontario, we ended up having to use a private mortgage broker here in Toronto because the banks didn’t want to touch us due to being self-employed and not a lot of reported income.  The process was easy, though the rates are higher, but we’ll switch to a conventional mortgage in a year or so to get the rate down again.

Mortgage Infographic

So if you want to get the best interest rate on your next mortgage, it pays to start preparing several months in advance as it can save you thousands of dollars in the future.

Credit Scoring


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