Not having enough knowledge of the whole mortgage application process can make you go through a lot of hassle. With some serious documentation required for the application, it is natural to feel intimidated. It is important to educate yourself more about the internal qualification procedures different lenders use. The information will help you sail through the process of finding and getting the right mortgage deal.
Before talking about different options you have available to obtain a mortgage, you need to understand a bit about different classes of borrowers and lenders in Canada. You belong to A-Class if you have a sound credit history and qualified income – such borrowers can get low mortgage rates from A-Type lenders. B-Class borrowers may not have an impressive credit history with unsatisfactory income, but some lenders may still be willing to offer loans at high mortgage rates.
When you are in Canada, you can try many different ways to get the mortgage. For instance:
- You can do it by working with a licensed mortgage agent or mortgage broker. They are also known as mortgage consultants, mortgage planners, or mortgage specialists and usually help A-Class and B-Class customers.
- You can also get a mortgage by working directly with a bank. Most banks have branches to deal with mortgage applications only. They usually facilitate A-Class borrowers with an exceptional credit history.
- You can also consider getting a mortgage by working with some individual financial institutes. They are usually considered B-type lenders and serve mostly B-Class borrowers.
- You can also go to private lenders and ask them for a loan. These lenders may serve B-Class borrowers.
A-Class borrowers can expect a good deal form A-Type lenders, such as Insurance companies, banks, and trust unions. Interesting, these lenders may also offer equity loan to some borrowers.
What it shows is that if you are interested in getting the lowest mortgage rate, you need to have a good credit history and belong to A-Class borrowers. However, you need to conduct your research and ensure that you have selected the right broker because they can help you cut a better deal even if you have a less-than-perfect credit history.
In order to find the best deals, be sure to compare rates and plans before taking the plunge. Never sign any credit check consent or application unless you have confirmed that you have selected the right broker and want to work with them. Here, you should also bear in mind that most lenders will eventually have the same rates but you may get some privileges depending on your unique circumstances. Sometimes, mortgage lenders may offer promotion rates and you should certainly take advantage of such offers.
When working with a mortgage broker, you need to consider their “buying down rates”. Different lenders charge differently depending on their policies and any commission split with agents or brokers. You should be working with a broker offering the maximum buying down rates. Someone with a high commission split is also likely to come up with a more affordable mortgage deal. So, consider all these points before you decide to take a home loan.