Your home is one of the largest purchases you will make, and usually with this purchase comes a mortgage. Many Canadians know that they want a good deal on their mortgage, but they aren’t sure how to get it or where to start. Getting a low-interest mortgage rate is a top priority for many home buyers, but this rate can be affected by a few different factors. Check out those factors below:
First, there are two different mortgage loans that Canadians can get. These are fixed mortgages or variable rate mortgages. A fixed rate will keep the same interest rate and monthly payments for the entire repayment, while the variable rate will adjust based on the lender’s prime rate. While the interest rate fluctuates daily, the monthly payments remain the same. If you are someone who likes long term financial planning and steady payments, go with the fixed rate. If you prefer a little risk that may or may not pay off, the variable rate is for you.
The actual rate of the mortgage depends on a few other rates. These are called the secondary mortgage market, and this ultimately determines your rate. The secondary market consists of the mortgage being sold to a third party investor by your bank or lender, the mortgage being combined with other loans to create a mortgage-backed security, and then that combination being divided into shares and sold to other investors. Because of the different prices that a mortgage can be sold and resold at, the price can also fluctuate. With this many moving parts, your rate can be drastically different depending on the time and the person you purchase it from.
Now that you know a bit about how mortgage rates are calculated in Canada, it’s time to find a great rate for your new home. One of the best ways to find a good rate is through a mortgage broker. For help with finding your perfect mortgage rate in the GTA, contact me today.