Whether you're moving out for the first time, need more space or you're just tired of renting, before you can buy your first home, you need to find your mortgage. After all, buying a home will be one of the largest purchases of your life.
But as a first-time buyer, you do have options.
The first two options to consider are whether or not you should hire a mortgage broker or work with your current bank.
Many potential borrowers value the relationship they have with their bank, to the extent that paying more in interest rates is still the best option for them.
However, a mortgage broker's job is to shop around to find a lender (whether a private firm or a large bank) that offers low interest rates and affordable fees.
A good mortgage broker will supply you with advice, and help you properly assess the overall costs associated with the mortgage. Brokers usually have more access to lenders, which is attractive to many would-be buyers. Your hired broker may also be able to access special rates from the lenders, which you wouldn't be able to obtain on your own.
It's important to know that most brokers work on commission, and they may be more aggressive to get you to sign with lenders that will pay them more for making a deal (and it might not be the best one for you). Before meeting with your hired broker, research the current market such as:
- The typical mortgage in the area you are considering buying
- Look at the terms, rates, and conditions of multiple mortgage plans to compare what is best for you
- Take note of factors that could adjust mortgage rates in the short or long-term
- Even speak with other homeowners in the neighbourhood as to whether they prefer a bank or mortgage broker
One thing to keep in mind when comparing a mortgage broker to a banker is flexibility. Big banks don't often supply borrowers with flexibility on interest rates, whereas brokers can shop around until they provide you with the very best option.
However, if you've decided on a bank as your mortgage provider, compare the offers from one of Canada’s largest banks to determine your best options. You may even benefit from pulling your own credit score to shop around the market.
This can be done by using services like Equifax or TransUnion, which will usually provide detailed analysis of your credit score for a nominal fee. Your credit score may qualify you for pre-approval from the banks, but not all banks will consider your account for pre-approval.
Whether or not you've chosen a mortgage broker or banker, never go into a meeting blind. Complete your own research by comparing the best mortgage interest rates ahead of time. You should always take the time to do your own background research before submitting an application for a mortgage. Once you have that initial knowledge, the experts can fill in the rest of the blanks.