Best Mortgage Rates in Guelph 2021
Guelph is one of the hottest communities outside the GTA for real estate. With an ever-increasing population, easy access to Hamilton and Toronto, and a thriving university, Guelph is a great place to call home. Whether you are looking for an investment property, buying for your new grad or are looking for a family-oriented community, Guelph is undoubtedly worth a look at for real estate.
We have seen massive growth in the real estate market, we have also seen an increase in questions around Guelph mortgage rates. So, we thought it was about time to sit down and touch on some of the most frequently asked questions and provide potential buyers with some much-needed answers.
Are Guelph mortgage rates higher than other cities?
Mortgage rates in the Guelph area are not significantly higher than in other cities in the region. A mortgage rate is not stagnant, instead they vary by area and are influenced by a number of internal and external factors for a lender. These factors include the number of companies in the area, the overall real estate market, sale numbers, and general competitiveness. Plus, prices will vary depending on the length of term or type of loan.
For instance, 5 year fixed rates will be slightly higher than a 5 year variable rate. Thus, if you are in a rural community, your rate may be a little higher than if you were located in a major city. Compared to larger cities such as Toronto or Hamilton, Guelph has a slightly higher advertised rate. However, the difference is negligible for most clients, and as the advertised rate is different from the actual rate, it should not make a real difference for potential buyers.
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Is it worth getting a mortgage pre-approval?
Mortgage pre-approvals are a necessary part of the real estate process in Ontario. The markets are hot, and homes are selling in mere hours, not days. A mortgage pre-approval gives you the necessary flexibility and knowledge about your budget, and how much you can stretch in this multi-offer and competitive market.
Once you have your pre-approval in hand, you will be able to make better financial decisions using actual data. Here are a few ways in which this process can help you through the home buying process.
A locked-in rate for a prescribed period
No matter when you start your search, a locked-in rate will give you the confidence that your rate will not go higher during your search. With this documentation, you know that your rate can only drop, and never rise. Plus, you can work with a broker or contact lenders directly, and try to secure a more competitive mortgage once you find that ideal home. The pre-approved number is only a benchmark, and you should be able to shop around to find that perfect rate.
A leg up when bidding on homes
With the crazy competitive market, it should come as no surprise that you need to leverage every possible advantage. One of the ways to leverage, is to limit the conditions that you put in on your offer. If you have a pre-approval, you can include a limited condition of financing, or even no condition of financing. This waive can happen as you already have the documentation and funds to supporting buying this home, and a no-conditional offer is a competitive one in this environment.
A maximum mortgage and ideal range in hand
Knowing what your maximum bid can be will help guide you through the search for a property. With a document in hand, you will see where you can bid and where you have wiggle room in case you end up in a bidding war. It gives you and your agent a mortgage amount and a hard stop, and that can be a valuable tool in today’s market.
Pre-approvals are a great way to get information, and secure a mortgage rate. But here is the thing, the process does not mean you have to sign with the bank or lender who gave you the documents. The process is generally done with one of the big banks due to their quick turnarounds. However, you do not have to sign with that same lender. Shop around, use a broker, or even ask for an updated rate when you go to sign. Pre-approvals are not the end result, they are the beginning of the process.
Pre-approvals will give you the power and flexibility to know what you can afford and what wiggle room you may have in terms of current mortgage rates, conditions or offers. Knowledge is power, and a pre-approved mortgage certainly gives you some power in this crazy Guelph real estate market.
Which bank has the best mortgage rates in Guelph?
When it comes to finding the bank with the best mortgage rates in Guelph, it will depend on several factors. Every client will find a different bank for their rate, and it comes down to your situation. Things such as the size of your mortgage, your mortgage term, variable rates vs fixed rates, your credit score, and the home’s purchase price will all affect your actual mortgage rate.
Depending on your situation, you may end up with a larger lender or someone small, but as we note, it is best to compare mortgage rates before you sign the dotted line. Lenders will all vary, and paying attention to details such as maximum payments and other fine print will help you find the best mortgage rates in Canada with ease.
The big five banks have traditionally been the go-to lenders in Canada, but things are changing. No longer do you need to rely on rates from the big banks or limit your options to find a lower mortgage rate. Smaller, mortgage specific lenders such as Canwise Financial, a Ratehub company, have started to carve out a niche within the mortgage industry.
These smaller lenders are pretty nimble and offer competitive rates. From the classic 25 year amortization to specialty mortgages, these small lenders are changing the way we do mortgages in Canada.
Should I use a mortgage broker in Guelph?
Naturally, we can’t tell you whether to use or not use a broker, but mortgage brokers are one of the best tools available to help buyers secure a great rate on their mortgage. Unlike working directly with lenders, mortgage brokers can access hundreds of lenders and find you the best rate possible.
Mortgage brokers have access to all of the same products you do, but with their insider knowledge and ability to find the best rate for your situation, they generally can leverage a lower than advertised rate for their clients.
No matter if you are a first-time homebuyer that is self-employed or a government worker that happens to be relocating to Guelph, a broker can pair you with the ideal lender and mortgage rate for your situation. Here are some of the pros of working with a broker.
They are a one-stop shop for mortgages.
Mortgage brokers have access to practically all lenders, and only a few specific lenders do not work with brokers. Thus, you get access to hundreds of lenders, big and small, that are looking to secure your business.
You do not pay the broker fees; the lender pays them! Thus, as a borrower there are no costs, and no risks to work with a mortgage broker to secure your mortgage. They are working for you, and let me tell you, it is hard to find professional help for free in the real estate industry!
Most brokers can secure better rates than you could ever secure with a lender working by yourself. There are a few reasons for this. Brokers have access to non-advertised rates, and can work with a lender to waive or move around fees to ensure you get that ideal rate.
It comes as no surprise that mortgage brokers know mortgages. This is their job, and if you have questions, your broker can answer them. They are a wealth of information that you will not get by simply reading up on mortgages online.
Unlike a lender, a broker will not care where your mortgage ends up. They have no skin in the game and want to have a happy client with the best mortgage rate possible. So, there is no pressure to secure a mortgage from a specific source, and the focus is left on the numbers, not the name on the letterhead.
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What is the difference between 1 year fixed and 5 year fixed rates?
Lenders utilize a complicated and often confidential algorithm to produce their rates for their entire suite of mortgage rates. In the current climate, borrowers should expect to pay a higher rate to lock-in a rate for a longer time. The reason for this is simple, interest rates are experiencing a record-low and banks know that the interest rate will eventually increase over the term. Thus, they do not want to be left with less profit, and raise rates accordingly.
So, the difference between a one and 5 year term fixed rate will normally be less than 1%. But the reasons for it, are complicated and come down to specific lenders, and their risk-profiles.