In 2016 and 2017 Ottawa brought in some major changes to the mortgage industry that has made the cost to lend mortgages much higher. The categorizing of a mortgage is now more complicated and depending how your mortgage is categorized: insured,insurable or uninsurable– there are different mortgage rates. This and other factors have resulted in lenders to have many different rates for a 5 year fixed rate alone! As you can see, the answer to the question “What is your best rate”, isn’t as straight forward as it used to be. In order to narrow down a rate more accurate to your requirements, there are a number of questions that your broker will need to ask you based on the some of the new rate factors. Questions such as:
Is your property default insured?
If you have less than 20% down, your property is default insured (CMHC, Genworth, Canada Guaranty). If you have more than 20% down, you can opt to pay for default insurance to get the best rates with almost all lenders. If your property is not default insured, you will likely pay a higher interest rate with many mortgage lenders.
What is the length of time of the term of a mortgage, and the rate type (fixed or variable)?
There are different rates if you choose variable or fixed rate, and there are different rates depending on how long a term you choose.
What type of property is it?
Some mortgage lenders charge higher for a high rise condo and if your property is “unusual”, this may also change your rate. There are also higher interest rates to mortgage a non-owner occupied investment property which is one that you rent out and do not live in.
Where is the property located?
Rates can vary province to province and also from urban to rural.
Are you refinancing your home?
Refinancing your home is going to increase your interest rate with most lenders, as it is not default insured.
How much is your home worth?
If it is over 1 million- your mortgage is uninsurable. Which means higher mortgage interest rates.
How long is your amortization?
If it is over 25 years- yes, you guessed it-you will pay a higher rate with many lenders.
Are you buying a rental property?
Mortgages on rental properties will also have higher rates.
At Mortgage Sisters West, we are licensed mortgage professionals with access to dozens of different lenders with a variety of products, and rates. If you see a red hot rate posted on rate sites you can be sure there are many provisions to that rate, and that rate may not apply to your particular requirements, goals, or unique situation. Without the advice of a dedicated professional, you could very well end up paying more for your mortgage simply because you did not know the right question to ask or were not asked the proper questions. Our goal is to save you money by asking questions, listening to your needs, and sourcing not only the best rate, but also the best product for your home financing.