All Rates are NOT the Same...
November 7 2017 Posted by Mary Poburan
WHAT IS YOUR BEST 5 YEAR RATE?
The most common inquiry I get is 'what is your best 5 year rate ?' At the best of times this is a challenging question to answer since all lenders have varied rates that not all people qualify for. Now that the road map of mortgage lending has changed, this is an even harder question to answer and here's why:
1) Lenders offer BEST rates to borrowers with less than 20% down that require mortgage insurance. Most published rates you see online assume you are a buyer with less than 20% down that will need mortgage insurance( CMHC, Genworth, Canada Guaranty).
2) Purchasing with 20% down or more will result in a higher rate than your insured neighbor may have recieved. The lenders pass on the 'cost' of having an uninsured mortgage to you in the form of a rate premium.
3) Refinancing your mortgage is only allowed when there is more than 20% equity and in this case, rates are higher than if you were purchasing with 20% down.
4) If you are buying an investment property you will now be paying the highest rate for this type of mortgage.
5) If you are transferring a mortgage that was originally insured( no matter how much you have paid it down), you may be eligible to transfer your mortage as is to another lender and qualify for best rates.
6) Some lenders will give you best 'insurable' rates IF your mortgage can qulaify under insured rules. So in other words if you can qualify at the benchmark rate and have less than a 25 year amortization you may qualify for better than standard rates. Depending on how much you are borrowing, you may have varied rates to choose from. For example borrowing only 65% of the value of your home may result in better rates than borrowing 80% of the value of your home.
7) Buying a less than standard property with more than 20% down? Some lenders charge higher rates for non conforming properties or condos for example. Each property may be evaluated on a case by case property.
8) Is your income source unusual? Are you new to Canada? Some lenders charge a higher rate to approve mortgages to lenders who may be self employed or have to qualify under the 'new to Canada' guidelines.
9) Renewing your mortgage? At renewal lenders will try to give you a rate that may be less than competitive. They may not use the above criteria to establish the rate offerings however it is best to make sure you are positioned as best possible under the circumstances. If a lender offers you 'insured' rates at renewal despite having more than 20% down originally, Take it! It could be a blessing. Call me first before renewing to make sure.
Are you confused yet? Dont be. Let an expert guide you to the best options available to YOU. Contact me today to make sure you have the best options avaialble to you. I apologize in advance if I cant give you a quick answer to your question.I hope now you understand why.
Mary Poburan
Senior Mortgage Consultant
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