Business and money concerns often dominate the news. Even people who are not necessarily interested in finance will tune into the headlines. Why? Because when you have a mortgage, the ups and downs the markets take can affect the payments you're making on your home, especially if you have a variable rate mortgage. To learn more about mortgage rates and how to get the best rate on your next home purchase, read on.
In order to get the best possible mortgage rate, you're going to have to do some preliminary work in the years before your home purchase to get your credit up to snuff. Customers who have good credit ratings and credit histories come away with the best mortgage rates, so make a concerted effort to pay your bills on time and keep a healthy debt to income ratio. You'll also want to save up as large of a down payment as you can, which will reduce the overall amount you'll have to pay in interest over the life of your mortgage.
When you go in to sign up for a mortgage to buy a piece of real estate, there are two basic options you will have to choose from in terms of mortgage rates. The first is the fixed rate option. With a fixed rate mortgage, you pay the same percentage of interest over the length of your mortgage. The only time your rate will change is when your contract comes up for renewal. Your other option is a variable rate mortgage. With this type of mortgage the percentage of interest you pay changes with each payment depending on whether the market has gone up or down. With a variable rate you could see a drop in your payments if the markets improve but you could also end up paying more if they suffer. You can speak Cannect about the option to refinance your mortgage and learn more about the differences between fixed versus variable rate mortgages.
At the time of writing (early 2013) the mortgage rates offered by banks in Canada were between 2.59% and 6.3% depending on the term, risk level, and credit history of the borrower. This translates to a total mortgage cost of about $2,500 and $6,300 on a piece of Toronto homes for Sale that you have bought for $100,000. So you see, by shopping carefully for your mortgage and reviewing all your options, you could save $4,000 or more in the long run.