The mortgage rate is the rate at which the banks are willing to lend money to you to buy a house or other types of property. The mortgage rate is determined in part by the repo rate that the reserve bank is lending money to the banks. That is not the only factor that determines the mortgage rate though. There are other factors involved and some of these factors are within your control.
That is why it’s important to shop around for your mortgage to get the best possible mortgage rate for you. But don’t be fooled by a very low mortgage rate. Some banks offer very a very low mortgage rate but then charge service fees that are way above other banks which means in the long run that your mortgage may cost you far more.
There are also many credit report companies who can help you with your credit score. It is important to have the best credit score possible, since your credit score also in part determines the mortgage rate the bank will offer you. A good credit score means a better mortgage rate. It can also mean lower deposits and lower insurance premium rates, so find out your credit score and try to improve it as much as possible
There are a lot of mortgage companies out there. This is good for you because they are all competing for your business and in order to compete they often offer a competitive mortgage rate.
And don’t just take the first loan offered to you, unless its the best of course! Find out if you can negotiate. Remember each percentage point on your mortgage rate, translates to thousands of dollars saved in the long run.
Finally, research the different loans available at different mortgage rate. There is a best type of loan for you and again, by applying for the right kind of loan, getting the best mortgage rate, you will or could save thousands which could be used for other things – like college, retirement or holidays…
The extra effort you put into finding the right loan at the best mortgage rate is well worth it in the long run.
But whether you’re looking for a fixed or variable mortgage rate loan, be sure to shop around for the cheapest mortgage rate.