It’s good to make sure that your mortgage broker in Ottawa is reviewing the options of each mortgage with you. These options can include the ability to pay the mortgage off faster and the ability to refinance. Also, the penalty calculation the lender uses, the ability to port the mortgage and so on.
Learn more: Prepayment, Porting and Assumable – 3 Mortgage Terms You Should Know
A lower rate with less options may end up being a very costly choice. A costly choice if needing those options down the road and having to pay larger fees or penalties.
The lowest rate is not always the best option. Depending on your unique financial circumstances and goals this can affect the type of mortgage, lender and rate. As with many promotions you typically will see the lowest rate advertised. For example, walking past a store in seeing up to 70% off. Often however you will find it’s a small selection and typically not the right product for you that is at 70% off. Most of the products that are of value to you will be with a lower discount.
This is similar to mortgages where an online company may advertise one rate only for you to hear that it is not available to your situation. Also, that it may come with restrictions or does not work with your goals.
Companies advertising these low rates are doing this to attract mortgage shoppers.
When looking for a mortgage, just like looking for a car, typically the cheapest one available in Ottawa Ontario is not always the one. The cheapest option may not come with the features options and security you want. It’s important to look at each lenders options to be sure they are the right fit for you.
A mortgage interest rate is a rate that is charged on the principal amount of the mortgage. The principle of the mortgage is the amount that you are borrowing. They’re quite a few factors that go into determining a mortgage rate. In general, fixed rates are affected by the bond market and variable interest rates are affected by the Bank of Canada overnight rate.
The Bank of Canada overnight rate is reviewed multiple times throughout the year and can go up or down during these reviews. Typically when this rate moves it moves by .25%. This will affect those with a variable interest rate.
A lender will add a premium to the Bank of Canada overnight rate and usually, this is about 2%. This amount can vary from lender to lender. Knowing which lenders add a larger premium to the Bank of Canada overnight rate is important. This is because if two lenders are offering you prime minus 0.5%, the lender with a larger prime rate will have a larger rate overall. Even though the discount looks the same.
One of the biggest advantages to using a mortgage broker is their expertise. Plus, their access to great rates at many lenders.
Each broker however will have their own amount of skills and experience. This experience in packaging and presenting your application to a lender can therefore vary from broker to broker. This can make the difference between an approval and a decline.
When talking to a potential mortgage broker it’s important to ask them how long they have been in the industry and the experience they have. If they just started there is a long road of learning ahead to know each lender’s policies and procedures amongst the dozens of lenders.
If choosing between an inexperienced mortgage broker and your bank branch, you may be better off with the bank if the representative there has more experience with mortgages.
It is quite rare, however some mortgage brokers may charge a fee if you leave them for another lender prior to closing or to assist you with a mortgage.
Some mortgage brokers may also not have access to as many lenders or discounts if they or their brokerage does smaller volumes. In this situation your bank branch may have similar rates.
The bottom line is an experienced mortgage broker should have access to the very best rates options and guidance for you.
In short, if you are thinking you need a mortgage, it’s best to reach out to them as soon as possible.
Connecting with an Ottawa mortgage broker early in the process, assists with making your experience stress-free and can align you with savings faster. As a mortgage broker can help you, from the review your pre approval application up to your closing date, they are your one stop shop and can save you time.
They can also help reduce the sadness and disappointment they can come from being declined for a mortgage. This is because, with more options and alternative lending solutions they may be able to find a mortgage option when your bank cannot.
Also, through their training, guidance and experience they can coach you in other areas such as building your finances or credit history.
Learn more: How to build your credit score
A mortgage advisor can help you determine what you can afford. The details that you provide to them will assist in determining your maximum home price. If looking for homes before talking to a mortgage broker, you may be looking at homes over or under your pre approval amount. Looking at homes over your pre approval amount can lead to a frustrating experience as it might set your expectations too high .
It’s quite often that people feel they may qualify for a house bigger than what the current mortgage guidelines will allow.
Learn more: Mortgage pre approval Ottawa
As a very soft rule of thumb, a person can qualify for a home about four to five times their annual income. Of course this can vary depending on the amount of debt and down payment you have.
Not only will a mortgage professional review your price and budget with you however they will also go over the other costs associated with buying a home. These costs are typically known as closing costs. They can include moving costs, land transfer tax, pre-paid property tax and more.
Learn more: Closing costs to consider when buying a house
Speaking to a mortgage broker early in the process is always recommended.
Also the mortgage professional can go through all the paperwork needed so that you can start to collect it upfront. It is much easier to start setting the documents aside early as opposed to having to rush to put them together at the last minute.
If you are already deep into the mortgage process, speaking to a mortgage broker for a second opinion is a great idea. If you currently have a pre approval that you are comfortable with, now is a great opportunity to contact a mortgage broker to see if the rate you have been offered is one of the best mortgage rates in Ottawa and Ontario.
Learn more: Best mortgage rates Ottawa
Some people prefer to do their own research and apply for a mortgage on their own such as with an online mortgage application. I do not recommend this as it is not an in-depth review. Plus, the paperwork has not been checked and it is also not looked at by a mortgage underwriter.
This section focuses on the credentials of a licensed and trained mortgage professional.
They are licensed
To become a mortgage broker in Ontario you need to take a course, pass an exam and have a license. There are also ongoing courses that a mortgage broker needs to complete.
They are true experts in their field
A good broker has a knowledge of not only mortgages and lenders, but the real estate market as a whole.
In order to find the best solution for your needs and assure that you are getting great advice, a mortgage broker needs to stay up-to-date with industry updates. Also, mortgage rules and what is happening around Ottawa, Ontario and the rest of Canada. Furthermore, mortgage brokers will be networking with lawyers, home inspectors, real estate agents and more. This helps broaden their knowledge, guidance and advice.
A honest opinion
Mortgage agents are highly regulated in Ontario. The idea of hidden fees from a mortgage broker or lender would be hard to fathom. The mortgage broker must provide you with a document that outlines the details of the mortgage and any cost associated with their service. Also any costs with the transaction is a whole from an appraisal fee, closings costs, mortgage insurer premium and so on.
You have to agree in writing to any fees charged by the lender or mortgage broker prior to closing.
Learn more: What are all theses insurances?
Traditionally one would visit their bank to learn about a mortgage. However, with the increased popularity of working with a mortgage broker, getting a mortgage from the bank is becoming less popular.
A mortgage broker is now a more familiar representative between you, the borrower, and the bank or lender.
A borrower is a person like yourself who is looking to borrow money for real estate
The bank or lender is typically a traditional lender such as Scotiabank, TD Canada Trust, Alterna Savings and more.
A mortgage broker is a licensed specialist whose goal is to find you the best mortgage rates in Ottawa. Also, to find you a mortgage product that fits your current financial situation and future goals. They have to complete routine education and courses. As well as pass an initial course and test to be able to provide mortgages. This is unlike a bank representative who does not need to be licensed or complete routine courses to advise on mortgages.
I get asked frequently when first talking to a client, “What are your rates?” This question is perhaps similar to a person calling a grocery store and asking, “What are your prices?”
This question may come up often, as with a client’s bank there are only a few mortgage options to choose from. Fortunately, there are dozens of lenders to choose from with a mortgage broker. These options also include major banks. And with many options at each lender, that means hundreds of mortgage options for you.
Within these options however, there are more factors that may go into determining your rate. Some of these factors a home buyer may not be aware of. From these following examples, you may quickly see how having a mortgage broker assist in finding the right option for you is crucial to finding the best interest rates for mortgages in Ottawa.
Not all lenders lend in all provinces, so depending on what province you are purchasing in, this may mean more lenders and rates or fewer lenders and rates to choose from. Typically provinces with more competitive real estate markets will have more lenders and competitive mortgage rates.
How long the rate is held Lenders typically will hold rates for 45 to 120 days. Generally, the longer you need a rate held, the higher the rate. If your closing date is more than 120 days away, you will need to review rates closer to your future closing date.
Many lenders are starting to add a premium to rates on a refinance. Also, with recent changes to mortgages, some lenders can no longer offer competitive refinance options. This means fewer lenders to choose from overall. Homebuyers will typically have lower rates than those refinancing.
Learn more: Mortgage Refinancing
Some properties are considered higher risk than others. Some lenders may not be able to assist with them or will have higher rates on these properties.
Second homes, vacation properties and income properties
These properties may have a premium added to a rate. Also, depending on the number of units in the rental property or if there is a commercial component, this can affect rates.
Your credit score is a large factor in determining your rate. Those with excellent credit will typically see lower rates than those with bad credit.
Learn more: Bad Credit Mortgages
Insured or uninsured
Those who have an insured mortgage (i.e. through CMHC when putting less than 20% down) may have access to lower rates. Lower rates compared to those with uninsured mortgages. Also, some lenders regardless of your down payment or mortgage structure will offer different rates based on if your mortgage is potentially ‘insurable’ or ‘uninsurable’.
Learn more: High Ratio, Conventional, Insured, Insurable and Uninsurable
Fixed or variable
The type of mortgage you choose, whether a fixed-rate mortgage or a variable rate mortgage, can have a big impact on your rate.
Homes prices of $1,000,000 or more can see higher rates than those under $1,000,000. Also, some lenders cannot assist with homes over $1,000,000, which means less lenders and rates to choose from.
Your loan to value
Lenders are now offering rates based on your loan to value. Those with 20% down may see a higher rate than those with 40% down, as an example.
30+ year amortizations are still available. However with these option their may be a premium on the rate or less lenders and rates to choose from.
Pre-approval or an active purchase
Some lenders with the best mortgage rate offer the rates on active purchases only. Also some lenders are adding a premium to the pre approval rate you are offered.
As you can see there are many factors that go into determining your rate. Working with a mortgage broker will be your best decision best interest rates for mortgages.
Compare some of the best mortgage rates in Ottawa and Ontario from a large range of Canadian lenders. Contact me today to get expert guidance and to see if I can negotiate a lower mortgage rate.
Although most lenders post their rates publicly, sometimes you may not get the lowest mortgage rate you have seen advertised. This is due to some rates only being offered for certain situations. Different rates are offered for those who are first time home buyers and those who are refinancing, for example. Also, different rates are offered for those who are buying an owner-occupied property or buying a rental property.
The size of your down payment and where the property is can I also have an effect on the interest-rate.
I am able to scan through dozens of lenders and different rates at each lender to show you the best deals that you may not be able to find or access otherwise. I can help cater the best mortgage for you and your unique financial situation. My goal is to ensure that you are always getting a fair deal and some of the best mortgage rates in Ottawa Ontario.
Having more options is crucial in assuring the mortgage is the right fit for you and you get a good rate.
When applying for a mortgage, an Ottawa mortgage broker acts as the middle person between the lender and you. They review your goals and needs and compare different mortgage products from multiple lenders on your behalf. They assist with the application process all the way to the closing date. Plus they are there to assist after closing as well. There are a lot of differences between a great Ottawa mortgage broker and a less than favourable one.
Many do not have the time to contact dozens of lenders to explore mortgage options when looking for a mortgage. Also some lenders only offer their mortgages through mortgage brokers. Therefore, if you value your time and want to be sure you are reviewing all your mortgage options, just visiting a few banks will not be enough. While you may have explored one bank’s options in an hour, a mortgage broker can show you many banks and lenders in that same hour.
A mortgage broker has access to many types of lenders too. From banks such as TD Canada Trust and Scotiabank to credit unions like Alterna Savings and even Manulife.
Also, with your one application and one credit check, a mortgage broker can use this by exploring many options. When you explore options at many banks however this will mean multiple applications. Plus, multiple credit checks can use up valuable credit points.
Mortgage agents can also access private lenders in Ottawa for a private mortgage.
As a mortgage broker does not work for the bank, you may wonder how does a mortgage broker get paid or if you have to pay them. Fortunately a mortgage brokers service is typically free to you. Similar to when you buy a home and use a real estate agent and the seller typically pays for your agent. When you get a mortgage with a mortgage broker, the lender pays the mortgage broker. With that, they are free to you.
A mortgage broker can find you the best mortgage rates upfront and at no cost, just like booking a trip on Expedia means savings upfront and a free service.
If there is ever a time where a mortgage broker charges a fee, the fee is disclosed to you upfront and you need to sign a form agreeing to the fee. That assures there are no hidden fees. Times a fee may arise are with alternative and private lending, construction mortgages and so on.
Contact me anytime to learn more about what a mortgage broker does and how a mortgage broker gets paid.
A fixed rate is there to protect you against future increases in interest rates. By locking in the rate, if the interest rate goes up, you are protected. However, if interest rates go down during the term you will have to wait till the end of the term until you can take advantage of the lowers rates. The reason for this is typically a lender will charge a penalty to break the mortgage during the term.
A fixed rate mortgage provides a set mortgage rate for a duration of time. Usually up to 10 years.
With these mortgages, your payment stays the same for this period of time. This can be very handy for people on a set budget.
Variable interest rates in comparison can have the payment or amortization change as interest rates change.
With these mortgages, you know exactly what your payment is month to month.
For this security, typically they come with higher interest rates than variable rate mortgages.
Learn more about Fixed Rate Mortages
How much down payment do I need to buy a house? About 10 years ago you could buy a property with no down payment. With this, you could get a mortgage that was 100% of the value of the property. Mortgage guidelines however have since become more rigid and most banks and lenders have reduced the loan to value that they are able to lend. How much down payment do I need to buy a house? The answer to this depends on a few things. Read our full guide about the house down payments.
When looking to buy a home and get a mortgage, an important first step is to answer the important question of, how much mortgage can I afford? Some people want to purchase as much of a home as their pre approval limit will allow without going over their comfort level or having stress with cash flow.
With determining your down payment and finding out how much a lender will willing to left you, this will help you know what price of house you can afford. If you feel this is more then enough for your needs then you can reduce the amount and if it’s not enough then you can look to options like adding a co signer. Read our full mortgage affordability guide.
Basically, a mortgage pre approval is the process where a lender approves or declines to you for a possible mortgage before you make an offer on a home. Once you make an offer on a home a pre approval turns to a formal approval.
During a pre approval review, a lender reviews your finances to determine if you can afford a home and if so what is the maximum price of a home you can buy. A pre approval helps you determine if there is a strong possibility that you will be approved for a mortgage once you make an offer on a home. Read our full guide about mortgage pre approvals.
There may come a time when you have bad credit. This may be due to financial challenges that are out of your immediate control such as co-signing for someone that doesn’t make their payments on time. Or perhaps there have been some credit challenges from a breakup when you had shared credit.
Fortunately, having bad credit does not limit you from owning a home. There are options to get a bad credit mortgage in Ottawa. Read our full guide about bad credit options in Ottawa.
A private lender mortgage may be an option if you are finding it challenging to get a mortgage from a traditional lender such as a bank or credit union. It is important to know the various pros and cons associated with private mortgages.
People typically explore a private lender mortgage because they are finding challenges in obtaining financing from a traditional bank. The reasons for this can vary from client to client.
Some example reasons would be having bad credit or already having your debt servicing ratios above traditional lender guidelines due to owning multiple rental properties.
Learn more about my private mortgage services.
A mortgage will probably be one of the largest financial obligations you will have. As there are so many banks and lenders available with different options at each bank and lender, it can be tricky to know which one is the right fit for you. The best mortgage broker in Ottawa can help you with the complex task of finding the best mortgage for your needs.
If you are interested in finding the best mortgage broker in Ottawa to assist with getting your mortgage, you can read our detailed tips to follow. We leave you a summary here below: