Is it possible to negotiate a mortgage rate?

[Michael Rivera]

Hi,

I have a question. Is it possible to negotiate a mortgage rate? What is your comment on this? I was searching for this for a long while. I think the experts here can give an exact answer to this query. Also, I  came across the Ontario mortgage rates and planning to research it. I would like to know more about them. Is it good that I approach a mortgage consultant? What is your suggestion?

I’m planning to take a mortgage this year. As I’m unaware of the different procedures for that, I would like to get the guidance from you.

Would like to know about the documents that are required to be submitted for this.

Your suggestions will be highly appreciated.

Thanks in advance

[Roy N.]

@Michael Rivera

At its core principals, real estate financing here in Canada is quite similar to in the U.S.A., however there are significant variation in the implementation (for residential financing).  Here residential mortgage terms can range from 6-months to 10-years, with a 5-year term being the most common.  Unlike the U.S.A. you will not typically be confronted by origin fees or "points" with financing for a residential mortgage.  Also, interest on {fixed rate} residential mortgages is calculated differently (compounded semi-annually, not in advance).

Qualification is also a little more rigorous.  Regardless of the type of financing (variable rate, fixed rate) and the term and interest rate being negotiated with your lender, you must qualify as if you were placing a 5-year term fixed rate mortgage with an amortization of 25 yrs at the Bank of Canada posted rate (presently around 4.64%).

Most lenders have room to move on their posted rates. If you have a low personal and household debt ratios and strong credit history, you should be able to achieve 0.3 - 0.5 off the posted rate with little effort.