Something moving is happening ... Home buyers are moving quickly to secure a home before the new mortgage rules set in on March 18th. This means that after the deadline, the federal changes and home debt regulations are going to be tighter for most Canadians just starting out. Recently Finance Minister Jim Flaherty publicized a progression of mortgage rule changes.
Canadians will only be able to borrow up to 85% of the value of their homes, down from 90 per cent. With these new regulations will make lenders more vigilant about who will get access to loans. With the present rules, consumers may sometimes find themselves in debt after having to cover the fees involving selling their home. With the new rules at hand, home buyers can now do regular bi-weekly payments, which is almost just the same as having the accelerated option. Home buyers who will put down less than 20 per cent of the value of the home are required to purchase government-backed mortgage insurance through Canada Mortgage and Housing Corporation.
Owning a house doesn’t have to be as expensive as you think. Research and patience is the pathway to finding something that suits your needs and expectations. Here are some tips according to the Bank of Canada on how to get the best mortgages.
Discount your Mortgage
Step 1: Bargain
- Skilled negotiators are typically favored by banks that end up giving better deals to well-informed borrowers. Also known as “price discrimination”. Buyers that are well-informed may end up paying a higher price.
Step 2: Have larger mortgages
- Having a larger mortgage provides lenders motivation to draw the consumer’s attention with larger loans who have a large outstanding balance at the time of renewal.
Step 3: Use a broker
- Using a broker lowers the search costs of getting multiple quotes.
- Bank mortgage specialists; although offer convenience, don't lessen search costs.
Step 4: Try to accomplish non-mortgage business with a lender
- Bank managers offer larger discounts to clients that are more or will be more advantageous to the bank.
Step 5: Have more equity
- Those who put a minimum down (i.e. 5%) pay higher rates than other borrowers.
Step 6: New clients
- New clients receive a larger discount versus existing clients.
Step 7: Use smaller lenders
- The larger a bank’s market share, the higher the rates it will charge to borrowers.
Step 8: Are financially capable
- Borrowers may experience more level of price discrimination when bargaining in person at the branch versus transacting through a broker.
Step 9: Have better credit
- Banks offer better rates to higher credit score consumers.