Over the past 5 years or so, there have been so many changes to mortgage products, qualifications, and rate categories, that giving out a price has become very difficult. Best rate for some may not be available to others...for a number of reasons. Where do you fit as a borrower, what are your options?
You are purchasing a home with less than 20% down payment and the home price is under $1MM.
You are switching institutions at renewal, and your original mortgage was insured.
This bucket allows you access to lower rates. (The banks are "insured" so in turn, they then pass along the benefit to the borrower with a preferable rate).
The maximum amortization on this one is 25 years.
This mortgage is for those with 20% down or more.
The purchase of a home over $1MM, or an investment/rental property.
This also applies to a refinance of an existing property to access the equity or restructure of original terms.
The mortgage rates are slightly higher than the insured mortgage rates.
There is the option to take a 30 year amortization, which can offer a significant reduction in the monthly payment.
**It's important to note that some of these mortgages in bucket 2 will fit into bucket 3. A purchase where there is a down payment of 20% or more may still have access to the "insured rates"!! This is called an "Insurable mortgage"....
Like Bucket 1, this mortgage must meet some of the insurers criteria in order to qualify. IE: property value under $1MM, strong borrower qualifications, good credit, etc.
Thankfully, we are able to tap into the insured rates, where we didn't have that option previously.
Lenders that offer this type of rate are called Monoline Lenders** (Some of these lenders have been around for 30 years + and have a book of business comparable to the big 5 banks. Your own bank likely won't have this rate offer)
**ask me more about Monoline Lenders
This is for the client that doesn't fit into any of the above, and needs exceptions to income, credit, property type, etc.
The rates differ from institution to institution, and are always higher than conventional mortgages.
They also come with a "lender fee", which also varies depending on the application.
On top of choosing the right bucket, there are rate products that you will need to decide upon. Here are a few:
Fixed rates:
1-10 year terms locked in with varying penalties and pre payment options
Variable/Adjustable rates:
3-5 year terms, also locked in with 3 month interest penalty and flexibility to lock into fixed terms
HELOC:
an "open" line of credit, interest only payments, and to a maximum of 65% of your home value
So, as you can see, when I am asked what my "best rate" is...it could take a while to explain! I hope this helps with a basic overview....And now it's time to see which one you best fit into!
