This is the first question anybody looking to buy a house usually thinks about. It should be the last one. The product in itself might be the same regardless of the institution but the characteristics of each mortgage can differ so much between them. 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 important to understand it.
Put your needs first and the rate after. Nevertheless, if the rate is what you’re looking for, I will show you the best Canadian mortgage rates and where to get them. 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.
Independent Mortgage brokers
Depending on where you live in Canada, the names of the company these independent mortgage brokers represent might be different nevertheless the services rendered are more or less the same. 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$.
It’s possible for them to offer such low rates 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 huge advantage is that their services are at no cost to the borrower.
Banks or credit unions
This is the 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. Nevertheless, 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.
This is an excellent rate for a financial institution. If ever you were interested in obtaining that rate, it would be important to confirm that it’s also available to non-clients if that’s the case.
The single parent, single income complication
Prior to anything, as a single parent with a single income there are many more things that need to be taken into account.
With a single income it’s more difficult to get approved because the debt ratio will be higher. To put it simply it’s the ratio between all your sources of income and all your debts. Consequently, if you have many debts, 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. I don’t want to be the bearer of bad news nevertheless federal child support payment does 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 conundrum forces single parents to go further in order to find reasonably priced dwelling thereby possibly increasing the distances between work, school for the kids and home. It can also have a negative impact on the cost of your transportation.
The rate is the least important factor
In addition to the aforementioned complications as a single parent, there are other factors that need to be understood even if you’re not a single parent. For example, is the aforementioned rate available if the down payment is only 5%?
What are the consequences if a payment is missed?
Is possible to pay a yearly additional amount if you have access to supplementary 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?
These are just a few examples of many questions that are important to ask hence the difference between the mortgage with the best rate and the right mortgage for you. A mortgage is a truly 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 future plans.
If you want to have access to the rates above or others, I suggest you visit ratespy.com. I have tested many online mortgage comparative 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. Nevertheless, remember that there are factors other than the rate to take in consideration when searching for the right mortgage.
What is your opinion on the subject? Do you know other places where someone can get the best mortgage rates?
Let me know in the comments below and it will be my pleasure to continue the conversation.