Mortgage rates are a key factor when buying a home, but securing the lowest rate isn’t just about searching “best mortgage rates Canada.” You also need to qualify. Here’s how to improve your chances of getting the best rate.

What is a Mortgage?

A mortgage is a loan used to cover the cost of a home after your down payment. The loan is repaid over time, with interest.

Mortgage Term vs. Amortization

Mortgage Term: The length of your mortgage contract (typically a few months to 5+ years). You must renew your mortgage at the end of each term unless you pay it off in full.

Amortization Period: The total time to repay your mortgage. If your down payment is:

Less than 20%: Max 30 years (for first-time buyers of new builds) or 25 years otherwise.

More than 20%: Your lender sets the maximum period.

What is a Mortgage Rate?

A mortgage interest rate is the cost of borrowing money. It depends on factors like loan amount, down payment, mortgage type (fixed vs. variable), and lender-specific offers. Your home acts as collateral—if you default, the lender can take your property.

10 Tips to Secure the Best Mortgage Rate:

Know Your Credit Score – A score of 670+ qualifies you for lower “prime” rates, while lower scores may mean higher “subprime” rates.

Lower Your Debt-to-Income Ratio – Keep your Gross Debt Service (GDS) ratio below 39% and Total Debt Service (TDS) ratio under 44%. Pay down existing debt to improve eligibility.

Boost Your Credit Score – Pay bills on time, reduce outstanding balances, and clear any collections from your credit report.

Show Income Stability – Lenders prefer steady income. Cut unnecessary expenses and consider additional income sources.

Prepare Employment History – A solid work history reassures lenders of financial stability.

Increase Your Down Payment – A down payment of 20%+ can get you a lower interest rate and eliminate mortgage insurance costs.

Build Cash Reserves – Having 3-4 months’ worth of mortgage payments in savings can help secure better terms.

Consider Market Timing – Interest rates fluctuate. If possible, wait for lower rates to reduce long-term costs.

Understand Mortgage Insurance – A down payment under 20% requires mortgage loan insurance, adding to your costs.

Shop Around or Use a Broker – Compare multiple lenders or use a mortgage broker to find the best rate (brokers are free for borrowers).

Now you can start your real estate journey! Finding the right mortgage is just as important as finding the right home. The Cliff Barron Team can guide you through the process and help you achieve your homeownership dreams... give us a call today!