THE MOST af­ford­able mort­gage rates in Canada

SHE Canada - - GROOMING - By Swati Rao

In the last few months the fi­nan­cial world has seen a num­ber of highs and lows. Those who un­der­stand the game of oil prices will agree that the three let­ter word, “oil” has the power to reg­u­late ev­ery other thing un­der the sun. Con­sider it a bless­ing in dis­guise if you are the lucky one who does not have to make (the nec­es­sary or un­nec­es­sary) con­nec­tions be­tween oil prices, mort­gage rates and ev­ery­thing else in be­tween.

But as they say ig­no­rance is not al­ways bliss, and in to­day’s world this holds true. In sim­ple terms, mort­gage is a loan given against one’s prop­erty or home that one pur­chases. The len­der (usu­ally a bank) pays on be­half of you for your house and in re­turn asks for re­pay­ment in di­vi­sions over a fixed pe­riod of time. The di­vi­sion of money to pay back is de­ter­mined based on the prin­ci­pal amount, down pay­ment, mort­gage and in­ter­est rates. In case one fails to make these di­vi­sional pay­ments on time, the house or prop­erty be­comes the as­set of the bank or len­der. Qual­i­fy­ing for a mort­gage is also not a cake walk as it was in back in the 2000s. With credit de­fault­ers on the rise and the 28/36 debt to in­come ra­tio, it has be­come tough for lenders to pro­vide, and prop­erty as­pi­rants to buy their dream houses. The Bank of Canada’s mer­cu­rial drop in the prime rate from 3% to 2.85 % in Jan­uary 2015 sent shock waves deeper than the oil fields. Mort­gage ex­perts had pre­dicted then that Canada would soon find its mort­gage mar­ket hit­ting record lows, which came true soon enough. Com­pe­ti­tion in the mar­ket led the Royal Bank of Canada to fol­low suit mak­ing it the first among top banks in Canada to pro­vide mort­gage rates at 2.84% for a five year fixed-rate and 3.84% for a 10 year fixed-rate.

TD Canada Trust of­fers the low­est posted spe­cials on fixed term closed rates for both 2 year and 5 year mort­gages cur­rently in mar­ket. Catch­ing up on the rate war, TD Canada Trust went a point fur­ther drop­ping their mort­gage rates to 2.74 % for the 5 year fixe­drate in a spe­cial of­fer scheme. TD Canada’s Marc Ku­lak, AVP, Real Es­tate Se­cured Lend­ing says, “We re­view our rates on an on-go­ing ba­sis to en­sure we re­main com­pet­i­tive and pro­vide our cus­tomers with flex­i­ble mort­gage op­tions and the right rate to meet their in­di­vid­ual needs.”

Feel­ing the pres­sure, in a mat­ter of weeks the Cana­dian Im­pe­rial Bank of Com­merce came up with an “in­tro-rate” of 1.99% for first 9 months of in­vest­ment un­der their New Res­i­dents and Non Res­i­dents Home Own­er­ship pro­gram, along with an on-go­ing 2.83% for a 4 year fixed-rate. CIBC chose to slash its rates to 2.69 % on the 4 year fixed-rate plan un­der nor­mal schemes rather than in the 5 year model. The rate war doesn’t end at banks, it is fur­ther in­ten­si­fied by other pri­vate lenders in the mar­ket: But­ler Mort­gage of­fers a rate of 1.99%, Can­wise Fi­nan­cial of­fers a rate of 2.48%, Mort­gage Al­liance Com­pany of Canada and Red­path Fi­nan­cial of­fer a rate of 2.49% as well there are var­i­ous other pri­vate lenders in the mar­ket. The com­plex­ity of choice is fur­ther diver­si­fied when real es­tate agents also pro­vide mort­gage ser­vices. For new buy­ers it is ad­vis­able to take help from a trusted mort­gage fi­nan­cial in­sti­tu­tion, lever­age on their knowl­edge of the mar­ket and knack for pro­vid­ing good deals. Marc Ku­lak sug­gests, for new prop­erty in­vestors a com­pet­i­tive mort­gage in­ter­est rate is im­por­tant, but so is hav­ing flex­i­ble mort­gage fea­tures. He also ad­vises prospec­tive buy­era to visit a lo­cal branch or con­tact a Mort­gage Spe­cial­ist to bet­ter un­der­stand home fi­nanc­ing op­tions avail­able to them.

Aa a con­sumer it is in your best in­ter­est to con­sult sev­eral agen­cies and in­sti­tu­tions and not just bank upon one to en­sure that you don’t end up with com­pletely un­rea­son­able bro­ker­age fees. Good luck with your search for the best mort­gage rates (which may seem harder than find­ing the right soul mate) and re­mem­ber to pay on time, ev­ery time.

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