You’ve probably been told to always shop around for the best deal. For every major purchase I’ve made in the past ten years, from a laptop for school, to my first car I’ve pounded the pavement comparing features and price. So why would it be any different when it came time to buy my first house and get my first mortgage?
I was surprised to learn of a recent report by the Canadian Associated of Accredited Mortgage Professionals, which discovered that four of five recent homebuyers didn’t consult with a credit union when getting a mortgage. As I do all of my banking at a credit union, it was obvious for me to check them out first, but if you do your banking elsewhere, it may surprise you how many competitive options are out there.
As this article points out, just because you’re a customer at one financial institution, doesn’t mean you’ll automatically get their best rate, let alone the best rate out there. After using a tool like a mortgage calculator to see what you can potentially afford, consider looking around at all types of mortgage lenders to see the current rates available. And that’s just the beginning – there is more to consider than just the rate when deciding on the right mortgage. Hey – some places even come with perks like a FREE 12-month home warranty program. I know mine did!
There are many options. Short term , long term … fixed, variable, closed , open…. You need to determine which term is right for you!
There are different types of mortgages available. Mortgages come in every shape and size! Some mortgages provide great features like allowing an annual lump sum payment, some provide extra cash in a cash back mortgage to help with immediate renovations , others provide a “skip a payment option”, and some allow the mortgage to be transferrable. It’s important to understand the features of your mortgage, it’s a good idea to read your mortgage contract and seek consult from your mortgage specialist if you are not sure of the features offered.
At this point you may be feeling overwhelmed, house shopping is hard enough without worrying that you’ll choose the wrong mortgage! The thing to keep in mind (and I know I did) is you do not know what you do not know. Talking to someone in person can be a huge help, I got some good advice from our mortgage consultant who helped me select the right mortgage, encouraged me to make a good down payment, but also made sure we had enough money so we weren’t house broke.
Consider setting up a meeting with potential mortgage lenders to pick the right mortgage for you. After this meeting you may leave with a pre-approval, which is typically valid for 60-120 days depending on the financial institution you are dealing with.
Still unsure if you’re ready to buy? Check out our thoughts on renting or buying a home and check out this mortgage calculator. Ready to go? Check out these helpful home-buying worksheets from the Canadian Mortgage and Housing Corporation here!