How to Find the Best Mortgage Rates in BC

Buying a home is a major commitment that will typically last you two decades or more. Finding the best possible mortgage rate can save you thousands of dollars over the lifetime of the loan, affecting the size of your monthly payments. If your interest rate is high, you might find yourself struggling by the end of the month, but a lower interest rate can give you some breathing room.

Even a seemingly minor difference in rate can save you a significant amount of money. Obtaining an interest rate of 6.5% rather than 6.75% may not seem like much until you consider that for every $100,000 you borrow could save you as much as $7,500.

Using a Mortgage Calculator

One of the best places to start is to simply estimate your monthly house payments to see how much you can reasonably afford. You can do this easily by using a mortgage calculator. Once you have this information, you are better prepared to look for the right mortgage at the best rate.

The mortgage calculator will need you to enter some information, including the total amount of the home, the down payment, the interest rate, the amortization rate, and the payment period. As you change the variable, the mortgage calculator will show you the affect on your monthly payments.

Tips for Getting the Best Mortgage Rates BC

Having an idea of what you can afford, it’s time to look for your mortgage. There are several things that you can do to help make the application process go your way:

  • Improve Your Credit Score

Among the most important considerations when applying for a mortgage are your credit score, income, and assets, so boosting your credit score is a good place to start if you want a lower rate, as it is a factor used by lenders to evaluate the risk of a loan. With a higher credit score, you will be viewed as less likely to default. Generally speaking, you should have a score of 620 or higher for a conventional mortgage, but to secure the best rates, your score should be 740 or better.

To build your credit score, be sure that you always make your payments on time, even if it’s only the minimum payment. Never skip a payment, even if it’s in dispute. If you think you will have trouble paying a bill, always contact the lender immediately to inform them.

  • Increase Your Income Stability

As with your credit score, income stability demonstrates to a lender that you are less likely to default on your payments. Take time to evaluate your income versus your regular payments and seek ways to spend less while earning more. This may include cutting out unnecessary expenses and taking the occasional extra shift at work.

  • Show Your Employment History

Having a history of steady employment is one more way to show a lender that you are less at risk of defaulting on payments. If you are self-employed, it may be more difficult to qualify, so be sure to furnish appropriate business records such as P&L statements and tax returns with your application.

  • Decrease Your Debt-to-Income Ratio

Your debt-to-income ratio represents the percentage of your gross monthly income that is used to pay your debts. The best way to improve this ratio is to make larger payments on your debts, purchase only those items you can afford with cash, and/ or increase your income. This is another signal to lenders that you are not a risk.

  • Save Up and Increase Your Down Payment

You can increase your chances of a lower mortgage rate if you are able to put more money down, especially if you have the liquid cash to pay 20% or more. Less than that will likely mean that you’ll need to pay private mortgage insurance.

If you are purchasing your first home, look for loans, grants, and other programs that can help you with your purchase.

  • Lock in the Rate

Because the closing process can take some time, you should lock in the rate to avoid having it fluctuate during that time.

Purchasing your home is likely to be the biggest expense you ever have. Saving as much as possible on your mortgage only makes sense.

To learn more about how to find the best mortgage rates in BC, contact us today.