How to get the Best Mortgage Rates London in 2018
More and more London Ontario mortgage rate shoppers are coming online looking for the best deal on their upcoming home purchase or mortgage renewal. However looking at a simple rate comparison page is often limited, and can lead to confusion and frustration. In 2018, London mortgage rate seekers need more than just a vague rate quote to look at online.
This short article was written to explain how the best London mortgage rates work based on different application types, how some Brokers and lenders can work to reduce your mortgage rate further than others, and finally there is some bonus material at the end that will show you how to save even more on your mortgage, by looking out for dangers and pitfalls lurking in the fine print of the mortgage.
You will become mortgage empowered, and know the right questions to ask.
In short, you get the complete story and a helpful guide for your mortgage shopping. We’re confident that the few minutes you invest here will save you several thousands of dollars on your best mortgage rate London over the coming years.
Lowest Mortgage Rate Shopping in London
While searching for the best mortgage rates in London, websites will usually offer their lowest rates up front. For example, here are our best mortgage rates that are available to many of our customers right now.
These rates are usually the lowest that can be offered, and apply to:
- Mortgages with less than 20% down payment.
- Mortgages in London with over 35% down payment OR equity available in the home on renewal.
The Best London Mortgage Deals Explained
These rates are accurate in many cases because most first time home buyers in London do not have the 20%+ down payment necessary to avoid the CMHC fee. The reason the rate is lower for CMHC insured (or less than 20% down payment mortgages) is that because CMHC takes all the risk away from the lender, the lender is able to price the mortgage at essentially a risk free mortgage rate. So these savings are passed down to the borrower in the form of a lower rate.
Similarly, when there is 35% or more equity available in a property, there is enough equity available to alleviate much of the risk concerns that lenders have. Therefore, the rates are kept their lowest in this case too.
These lower rates apply to many mortgage holders or applicants, because often on the renewal date, the house has grown in value by 30% or more over the past 5 years. So even if there was a 5% down payment made 5 years ago, the house in London is likely to have the necessary 35% equity available to achieve the best mortgage rates.
20% Down Payment Mortgage Rates
Often mortgage shoppers will plan to avoid CMHC insurance fees by placing a 20% down payment on their home. This is great planning and advice to follow, however, the mortgage rates received will be higher than the best mortgage rates available in London.
In this case, rates can be up to .20% higher than the lowest rates advertised on websites. For example, a mortgage rate 0f 2.99% may be more like 3.19% with a 20% down payment mortgage
The reason for this is that the lender is assuming the maximum amount of risk that they can. Because if it was a 19% down payment, then it would be CMHC insured. If it was a 25% or 30% down payment, lenders would have some more ‘safety net’ to protect themselves against mortgage foreclosure. But at 20% down payment there is no CMHC insurance and they have their maximum exposure to risk. So they price this into their best mortgage rates available.
So, is it better to pay the CMHC fee for 20% down payment mortgages?
So far, in 2018, the answer is always to AVOID CMHC based down payments if possible. Even with a slightly higher mortgage rate, there will still be savings by avoiding the CMHC fee and paying the slightly higher rate.
At 25% or 30% down payment, rates approach their lowest again.
How some London mortgage brokers can offer lower mortgage rates than others
There are two main things that will determine how you can get the lowest mortgage rates in London:
- Lender relationships
- Rate buydowns
Lender Relationships
In London, some mortgage brokers will have a better mortgage deal than others because they have access to lenders that other brokers do not. It’s that simple. But even more, some Brokers have better relationships with more lenders, and because of these better relationships are able to obtain rate specials, promotions and discounts that are not available to all brokers.
Mortgage Rate Buydowns
Brokers do have the ability to ‘buy down’ the mortgage rate to its absolute lowest level using their lender paid commissions. So even after the mortgage lender rate discounts and promotions are applied, Brokers do have the ability to lower rates even further in London by sacrificing some of their commission.
For example, instead of receiving a 1% commission on the mortgage volume, Mortgage Brokers may elect to receive a 0.50% commission on the total mortgage volume. This has the effect of passing these dollars onto the customer in the form of a lower rate. In this example, a rate may be bought down from 3.19% to 2.99% using the commission buydown.
A broker would use this business strategy to attract more customers and make less money on a higher number of mortgage transactions.
The main thing to consider here is who you are dealing with now, and who do you want to be dealing with throughout the life of your mortgage. A mortgage broker in London who does not buy down the commission willingly, and forthcomingly, will probably not be doing this in the future.
The key is to find the best rate in London upfront without the haggle or games. This will show the true honesty and sincerity of the person quoting you that ‘lowest mortgage rate’. This is the approach you will receive as changes such as moves or future renewals come up and this is an important thing to understand.
It’s not about the 3, 4 or $5,000 saved in the current mortgage terms – it’s about the $15,000 – $20,000 or MORE save over the life of your mortgage. Picking who to trust online can be done easily, because you as the consumer have the power to make a couple quick calls or messages, and see the difference for yourself.
BONUS Material – How to Save on you London Mortgage – Beyond the best mortgage rates!
What’s the point in having a great mortgage rate, if you are just going to be charged massive penalties and fees down the road to make up for these excellent rates?
It is important to ask the following questions, along with your low rate mortgage to discover if you are truly getting the best deal:
- What is the penalty involved with the mortgage if I pay off more than the prepayment privilege amount?
- What is the prepayment privilege amount?
- Is the mortgage a ‘collateral charge mortgage’? Can I freely renew to a different lender at the end of the term?
- Is the mortgage portable to a different house?
These simple questions are well worth asking in addition to obtaining the best mortgage rate in London and will ensure that you save the most on your mortgage over time.
We invite you to contact us at your convenience for a personalised, custom mortgage quote and explanation of your best mortgage options.
