5 Reasons Keeping British Columbia Homebuyers From the Best Mortgage Rates
If you’re thinking of buying a home, you’re probably concerned about what sort of mortgage rate you’ll qualify for. This is one of the biggest concerns for potential home buyers. It can be challenging to qualify for a good mortgage rate, especially here in British Columbia where real estate prices are skyrocketing.
We’ve created a quick guide to identify the top 5 things that are holding you back when it comes to qualifying for a great mortgage rate, so you know what to avoid and change:
1. Credit Score
This one might be a little obvious, but a good credit score is essential when it comes to qualifying for the best mortgage rate possible. When you take out credit, it counts against your credit score even if you’re making the minimum payment every month. If you have credit card debt, you’re better off to pay it off in preparation for applying for a mortgage, as this will help you qualify for a better rate.
Check out our guide on 6 Ways to Keep Your Credit Score as High as Possible in Vancouver for more tips.
2. Self-employment
There are many perks to being self-employed, but it could be detrimental to you when applying for mortgage rates. This is because tax write-offs associated with self-employment can reduce the amount of income that can be used on your mortgage application. This means you won’t qualify for as low of a rate you think based on your gross income level. It’s important to consider this when shopping for a mortgage if you’re self-employed, as income level is a big factor in interest rate.
3. Loan term
When qualifying for a mortgage with a good interest rate, the length of the term can be important. A 15-year term typically has a lower interest rate than a 30-year term. However, the term length that’s right for you also depends on a number of other factors your mortgage broker can help you determine.
4. Interest rate types
You’ll probably have the choice between fixed and variable interest when shopping for a mortgage. While a fixed rate can seem like a safe choice, a variable rate can also remain low enough for you to save more over time. It also depends on the other factors that go into your mortgage rate, like credit score. That’s why it’s important to talk to your mortgage broker to determine the best choice for you.
5. Home location
Many people choose to buy a home in the suburbs to save money. Mortgage rates are also more expensive in a big city with high real estate prices such as Vancouver, British Columbia, so it makes sense to consider shopping outside of the city, not just for overall home price, but also mortgage rate.
Now that you know what could be keeping you from qualifying for a great mortgage rate, it’s easy to feel discouraged if some of these things are in your way.
Don’t panic! Book a call with Your Mortgage Guide to find out how we can help you improve your chances of getting a great interest rate.
