Toronto's housing market witnessed a boom as buyers rushed to claim the first round of spring listings. Statistics released by the Canadian Real Estate Association (CREA) reveal that national home sales rose 4.6% monthly in February.
The housing market in Toronto continues to be a seller's market due to the high demand and lack of listing inventory. If you're on the hunt for a new home, how do you secure a mortgage in your favor when other buyers are competing for the limited listings available?
Shop Around Until You Find the Right Rate
Consulting numerous mortgage companies allows you to save money and make sure you're getting the best deal. Each lender you visit may give you a different rate, and even if they vary by a small percentage, a lower rate could save you a lot of money in the long term.
Many new homeowners ask a common question: how much should my mortgage be? There is no universal answer for this question because a few factors determine your mortgage rate. The cost of the house you're interested in, your down payment and economic factors influencing the prime interest rate are all integral factors.
Shopping around and speaking to multiple mortgage agents provides you with a range of options and determines which rate and fees work best in your favor financially.
Understand Your Mortgage Options
A key to securing a good deal is knowing your mortgage options. Do some research to determine what influences your mortgage rate, the type of mortgage you could get, and what each company offers.
One essential thing to note is the type of interest you choose. Depending on your financial status, you can opt for a fixed or variable interest rate. A fixed-rate will remain the same for the entire loan term. A variable-rate can fluctuate during the term. Both options have pros and cons, but your comfort level determines which one best suits your needs.
Be Cautious of Mortgage Fraud
The increasing demand for mortgages in Toronto's current housing market can allow scammers to enter and take advantage of potential buyers. Some scammers may convince you to commit mortgage fraud with sweet promises to quickly get you a loan by deliberately misinterpreting information to obtain mortgage finance.
Mortgage fraud can occur in many forms, such as misstating your work position or income, not disclosing debts, or using someone with good credit to attain a mortgage. Protect yourself by being cautious of scammers and looking for a reputable mortgage company that can help you get a mortgage legally.
Improve Your Credibility
Your finances play a critical role in your chances of getting a reasonable mortgage rate. You can boost your application by showing lenders that you're not a high-risk client. Improve your credit score by paying off outstanding debt and gathering proof of steady income, if you have any.
When lenders perceive you as a client capable of paying off debt promptly, they may offer you a better interest rate, which could lower your costs.
Securing a mortgage in Toronto's current housing market dominated by sellers can be challenging. But, you can still get a favorable rate and enjoy your new home by following the steps above.