Our resident mortgage broker, Eitan Pinsky, is back with another useful blog about the wonderful world of mortgages. If you are looking for a property, even just dipping your toes in the water, you need to talk to a mortgage broker. Not only will you learn what you can afford, but they can help you decide whether to pay off a loan or save more money, whether to choose the lowest interest rate or flexible terms, and they will encourage you to start pulling all your financial information together so that you can be ready to buy.
Take it away Eitan..
Why Some Buyers Get the Best Interest Rates
The rules of the mortgage rate game aren’t so simple anymore (and change constantly). There are a lot of factors that come into play when it comes to determining what you can afford.
Interest rates seem like a fairly simple concept when it comes to mortgages, but there’s more to it than meets the eye! The craziest thing is that the hardest (i.e. “best”) rate to give these days are at 80% loan to value (i.e. when you have 20% down)… Yes, there *should* be a lot of options available but unfortunately the Government has made getting a mortgage from monoline lenders much more difficult. Also, because monoline lenders are having a tougher time lending at 80% loan to value, the banks have increased their interest rates to get more profit off Buyers. True and crazy… if you don’t know what I mean, contact me to go through a personalized mortgage plan: [email protected] or 778-990-8950.
So, what will affect your interest rate?
Long story short, the best rates are saved for:
Best Rates: Client-paid insurance / High ratio (i.e. Buyer has a down payment of less than 20%)
Great to Best Rates: Insurable Mortgage at 70% loan to value or lower (i.e. Buyer has a down payment of 30% or more)
Great Rates: Up to 80% loan to value (i.e. Buyer has a down payment of 20% or more)
OK to Good Rates: Rental properties and non-income qualifying (Stated Income)
Worst Rates: Private Lenders
Click here for the full article titled “Whats YOUR Best Interest Rate“
Current 5-year variable and fixed rates can be as low as 1.90% and 2.44% respectively, if the mortgage is insured and if the mortgage has a couple restrictions. If the mortgage is uninsured or uninsurable, the rates go up to 2.30% and 2.69% respectively.
I wrote about the difference in rates, based on the new Government regulations, in my blog: “The Complexification of Mortgage Rates.” Without reading the full article, it’s important to distinguish between what is “insurable” and “uninsurable.” An “insurable” mortgage is approved at 25 years amortization and at a higher rate than what a borrower would actually be paying (called the qualification rate – at time of this article, it is 4.64%). An “uninsurable” mortgage is any refinance, mortgage on rental properties, mortgages approved at 30 years amortization, and properties worth more than $1 million.
I’m happy to chat about the chart, and what your best mortgage will be. Give me a call or send me an email to get started.
Eitan Pinsky
Mortgage Expert
Pinsky Mortgages
778-990-8950
[email protected]
www.pinskymortgages.ca
