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All You Need To Know About Low Interest Rate Mortgages




Looking for the best mortgage rate in Canada is a huge task. You must know that besides being a low rate, a good mortgage rate is one that brings down your total borrowing costs. You need to look at a number of factors to know if you are getting the best mortgage rate and this can't simply be done by looking at just the mortgage rate. For the convenience of starting somewhere, people start by looking at a low mortgage rate. It is more of a way to shortlist some of the many options you may have. The next step is to compare what each lender is offering you i.e. you would need to go through the terms and conditions in detail and see what suits your financial situation best.


To get the best mortgage rate you also need to meet certain criteria which we have discussed before. These include a good credit score, provable income, reasonable debt ratios, and an employment tenure that is decent enough.


On What terms do lenders offer low mortgage rates?


You may come across some lenders who may offer unusually attractive or low mortgage rates than most others. You need to be careful as most of them would have a 'catch' in the mortgage agreement which they will present to you when locking the deal. Here are some of the possibilities:


High Penalty: Life isn't a free lunch. Cheap rates may come with high prepayment charges in the event of the borrower breaking the mortgage early. These charges are also known as penalties and in case things don't go as expected by the lender, they can leave as much as three or four times the money you saved by getting a low-interest rate. Banks as lending institutions are known for high penalties such as these.


Portability issues: You may be aware that in the event of you shifting to a new space you can port your mortgage. This saves you a lot of penalties. Many lenders who give you low rates put restrictions on porting which means you will have to pay a high penalty in the event of you moving. A good thing to do would be to look for a lender who gives a minimum of 60 days to port along with fair rates.


Refinance policies: People who take mortgages of five years or longer may need money before their mortgage matures. But lenders with low rates limit your ability to refinance or charge high rates on fresh borrowing, and some may even do both.


Restricted prepayment options: For low rates, lenders often strike out the pre-payment options. This means you may be restricted from making any extra payments to lower your interest costs.  


Armed with this information you can confidently approach the lenders whose terms you are most comfortable with and make an informed decision.


If you need any further help with low-rate mortgages do write to us at LendX.

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