Top 11 Mortgage Financing Tips & Strategies in Canada
If you're like me, you've probably been bombarded by advertisements from mortgage brokers promising the lowest rates. But what's the best way to finance a home in Canada? Here are eleven strategies that can save you money and help you get the best mortgage rate.
1. Get a fixed-rate mortgage
With a fixed-rate mortgage, your payments will stay the same, no matter how high-interest rates go. That makes budgeting a lot easier, and can help you avoid being "house poor." If you're worried about rates going up, you can always refinance to a lower rate later on.
2. Get a shorter term
A shorter-term means higher monthly payments, but you'll pay less interest over the life of the loan. For example, a 5-year mortgage has a lower interest rate than a 30-year mortgage, so you'll save money in the long run. Plus, you'll be debt-free sooner!
3. Make a larger down payment
The more money you put down, the lower your monthly payments will be. That's because you'll be borrowing less money from the bank. If you can afford it, a 20% down payment is ideal. But don't despair if you can't come up with that much cash - there are still plenty of options for financing a home with a smaller down payment.
4. Get pre-approved
Being pre-approved for a mortgage gives you a definite advantage when you're bidding on a home. Sellers will know that you're a serious buyer, and they may be more inclined to accept your offer. Plus, being pre-approved can help you avoid being taken advantage of by pushy real estate agents or sellers.
5. Shop around
There's no need to go with the first mortgage company you talk to. Shop around and compare rates from different lenders. You may be surprised at how much you can save by simply doing a little bit of research.
6. Stay away from "junk" fees
Some mortgage companies will try to charge you all sorts of hidden fees, such as "processing" or "administrative" fees. Steer clear of these companies - they're just trying to take advantage of you.
7. Get a good faith estimate
When you're shopping around for a mortgage, make sure to get a good faith estimate from each lender. This document will outline all of the fees and charges associated with the loan, so you can compare apples to apples.
8. Avoid adjustable-rate mortgages
With an adjustable-rate mortgage, your interest rate can go up or down depending on the market. That means your monthly payments could change, and you might end up paying more interest over the life of the loan. Unless you're prepared to take that risk, it's best to avoid adjustable-rate mortgages altogether.
"Adjustable-rate mortgages can be tricky," adds McKay Wood, a certified mortgage broker. "Unless you're prepared for your monthly payments to change, it's best to avoid them altogether." — "Nothing's worse than being caught off guard by a rate hike," says Wood. "A fixed mortgage payment gives you peace of mind and makes budgeting a lot easier."
9. Don't buy more house than you can afford
It's easy to get caught up in the excitement of buying a new home and end up spending more than you can realistically afford. Before you start shopping, sit down and figure out how much house you can afford, based on your current income and debts. That way, you'll know exactly what you can afford to spend, and you won't be tempted to overspend.
10. Get rid of debt before you buy
If you have a lot of debt, it will be harder to qualify for a mortgage. So, if you're carrying a lot of credit card debt, now is the time to pay it off. The same goes for any other debts you might have, such as student loans or car loans. The less debt you have, the easier it will be to get a mortgage.
11. Don't let your emotions get in the way
When you're buying a home, it's important to stay level-headed. Don't get too attached to any one property, and be willing to walk away if the price isn't right. It's easy to get caught up in the emotion of buying a home, but remember - it's just a house. As long as you find a place that meets your needs, you'll be happy.
Conclusion
These are just a few of the many strategies you can use to get the best mortgage financing for your needs. By doing your research and shopping around, you can save yourself a lot of money in the long run. So don't wait - start looking for your dream home today!
You might also like: Choosing a Mortgage Provider [ratehub.ca]
