Inflation worries are driving up interest rates. BMO and RBC both hiked their rates yesterday by 1/5 to 1/4%. Others will follow. There are still a few lenders near 5% if you have good credit.
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“There are still a few lenders near 5% if you have good credit.”
So are you saying that if you have a good credit history you can negotiate a better rate?
Can you also clarify some other issues – do you get a better rate if you have a large downpayment (25% or more)? do you get a better rate if you have a better/secure job with a higher salary??
Thanks
Thank you for the inquiry.
Your questions are:
1. If you have a good credit history, can you negotiate a better rate?
To a certain extent, yes.
Lenders look at the 5 C’s of credit to determine whether or not to lend you money. The five key elements a borrower should have to obtain credit are: character(integrity), capacity (sufficient cash flow to service the obligation), capital (net worth), collateral (assets to secure the debt), and conditions (of the borrower and the overall economy).
If you meet all five of these criteria, you would be eligible for preferred rates.
2. Do you get a better rate if you have a larger down payment?
Generally speaking a larger down payment does not necessarily provide you a better rate, since lenders look more at the above credit factors to determine their perceived risk.
A larger down payment will, however, save you on mortgage default insurance premium (which apply if you put less than 20% down).
See this link for more information:
http://www.genworth.ca/mi/eng/product_solutions/1st_mort_owner.asp
Premiums also vary with product placement.
3. Do you get a better rate if you have a better/secure job with a higher salary?
The general rule of thumb is that you need to work two years in the same industry to get the best rates.
Lenders do make exceptions to the two year rule, but often charge a higher rate to compensate.
Hope this helps!