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The first question many people think about when they start looking to buy a house is where to get the lowest rate. It should be the last one. Mortgage characteristics can differ so much between financial institutions. The right mortgage might save you thousands of dollars, and the one with the best rate might cost you thousands of dollars. There’s a difference, and it’s essential to understand it.
Put your needs first and the rate after. Nevertheless, I will show you the best Canadian mortgage rate and where to get it.
For the sake of simplicity, these are the factors we’ll take into account for this comparison between the different providers:
- Dwelling: 2 bedroom single family condo
- Condo price: 725000$
- Down payment: 10%
- Mortgage amount: 652500$
- Mortgage term: 5 years fixed rate
- Mortgage amortization: 25 years
- Province: Ontario
- City: Toronto
- Purpose of the loan: Buying a home
- Available for refinances and no cashback mortgages
- Date: January 25th, 2020.
Related article: Residential mortgage rates today and how to beat the banks
Independent Mortgage brokers
Independent mortgage brokers are here to help you find the best lending product. These individuals or these online mortgage brokers have access to the best rates of at least 25 lenders. They have an in-depth knowledge of all the mortgage products offered by all the institutions, are experts in their field and will provide a personalized service.
The independent mortgage broker with the lowest rate in Toronto is IntelliMortgage. They offer a mortgage with a rate of only 2.48%, which is equal to monthly payments of only 2916$.
They can provide such low mortgage payments because of the sheer volume they source to the lenders. These same lenders give them rebates then the mortgage broker transfers these perks to the client. The lending institutions they do business with are banks, credit unions and other private lenders if your credit profile is not stellar. A considerable advantage is that their services are at no cost to the borrower.
Banks or credit unions
Banks or credit unions represent a more traditional way of getting a mortgage. Depending on the amount of assets you have with your institution, they might be able to lower your interest rate. If they’re sometimes less competitive on the interest rate front, they usually have other tools in their arsenal. For example, they can offer to pay the closing costs of the mortgage or the inspection fee, among other things.
The bank or credit union with the lowest rate in Toronto is HSBC( ratesupermarket.ca ). They have many Special Offers including a mortgage with a rate of 2.49%, which is equal to monthly payments of 2920$.
2.49% is an excellent rate for a financial institution. If ever you were interested in obtaining that rate, it would be essential to confirm that it’s also available to non-clients if that’s your situation.
The single parent, single income complication
Before anything, as a single parent with a single income, there are many more things you need to consider.
With a single income, it’s more challenging to get approved because the debt ratio will be higher. The debt ratio is the ratio between all your sources of income and all your debts. Consequently, if you have many obligations, there’s a strong possibility that a higher down payment might be necessary. Another important aspect is that if you receive alimony, the only way to include it as revenue is to provide a legal document stating the amount received. If you have an amicable agreement with your ex-spouse, it will not count. Additionally, federal child support payments do not count towards annual revenues unless your children are under a certain age.
The single parent, single income complication, is real. With housing prices increasing faster than our wages, it’s becoming more cumbersome to be an owner. This problem forces single parents to go further to find a reasonably priced dwelling, thereby possibly increasing the distances between work, school for the kids and home. It can also increase the cost of your transportation.
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The rate is the least important factor
In addition to the complications mentioned above as a single parent, other factors need to be understood even if you’re not a single parent. For example, is the rate as mentioned above available if the down payment is only 5%?
What are the consequences if I miss a payment?
Is it possible to pay an additional yearly amount if you have access to supplemental funds?
What about increasing your amount or doubling your payments?
Or what happens if you move? What are the costs for breach of contract?
Is your mortgage portable to another province or city if need be?
Rather than ask for the best mortgage, demand to have the right mortgage. A mortgage is a genuinely complicated product, and it’s utterly foolish to treat it the same way as buying groceries or shopping for clothes. A wrong decision can make you lose thousands of dollars and hinder your plans.
Related article: How to calculate interest rates and how it can make you rich.
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If you want to have access to the rates above or others, I suggest you visit ratesupermarket.ca. I have tested many online mortgage-related sites, and they’re by far the best in the business. They will provide you with the names of the institutions that have the best rates possible according to your situation and your location, wherever you are in Canada. Remember that there are many factors to take into consideration when searching for the right mortgage for you.
What is your opinion on the subject? Do you know other places where someone can get the best mortgage rates?
Thank you for reading my article.
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