Understanding Canadian Mortgage Rates
Shopping for your first home is an exciting time! While you may find your dream home, you need to get preapproved for your Canadian mortgage before you start looking. Once you have a preapproved mortgage you’ll know how much you can spend on your next home or your current home. Right now Canadian mortgage rates are at the lowest point they’ve been in decades, and if you can get a fixed rate mortgage now you’ll be able to lock in those low rates for the life of your loan! Why wait when you can get the deal of a life time.
Why Are Interest Rates Important
You’ve seen 3% interest rates and 4% interest rates, but that’s only a point between them! It’s not like you’re saving that much over the life of a 30 year loan… right? Say you borrow $75,000 @ 3% interest; you’ll end up paying $2,250 a year and $33,750 over 15 years (much less if you pay it off early!). Now if you borrow that same amount of money at 4% interest you’ll pay $4,000 a year and $45,000 over a 15 year period. That’s an extra $11,250 in 15 years! Can you imagine better uses for that extra 1% on your loan?
This is why interest rates are so important! It’s easy to just lean back and hope that the bank or lender will give you the best rate, but you’re going to have to fight for it. A mortgage broker is going to be able to help you find the best deal and they’ll even negotiate down to an 1/8th of a percentage point. When you get up in the high numbers (and you’re bound to) that sliver turns into tens of thousands of dollars over a thirty year mortgage term.
Why Banks Don’t Want to Lend at Low Rates
Lending money to borrowers doesn’t generate any profit to the bank, especially at these low interest rates. Banks make money on interest, and the higher the interest they can get from you the better. A Toronto mortgage broker is going to help you understand the real cost of your mortgage and how Canadian mortgage rates can work for you or against you. With hundreds of thousands of households holding high mortgage debt with double digits interest rates, you need to avoid the trap.
Get the Best Canadian Mortgage Rate
Get started on the right foot and get the lowest interest rate at the start of your mortgage. If you can get a fixed rate mortgage at the start, get it! This is when you need a mortgage broker. They can help you find out what your asking amount should be, they’ll find you different deals so you know what’s going on, and best of all they’ll help you go over the terms of the mortgage so you understand what the real financial cost of your mortgage will be. Trust a professional; the banks are creative and you need a professional on your side.