When you are looking to get the best mortgage rates in Toronto, then you will definitely have to plunge into the world of mortgage. Getting qualified for receiving mortgage, you are not just bound to show off your credit score, but there is much more than that. In this industry, lenders examine many things to get assurance that whether you qualify for the mortgage or not and the interest rate at which you could get the mortgage amount.
For lenders and borrowers many things are put at risk and stake. The interest rates can vary greatly depending upon various factors. And if you are enthusiastic about getting the best interest rates then you will have to make sure that you first get qualified for that.
Following are the areas in which your lender will evaluate your care and will decide the mortgage rate you could get.
1. Credit score:
In this modern age, mortgage lending is no more the same. It is merely based upon tiered costing. It means that mortgage rate is directly proportional to different criteria. The strength of your credit score will decide whether you could get the mortgage and if yes then on which rate.
Here there is an inverse relationship. It means that if your credit score is high then your mortgage interest rate will be low.
Those who have credit score of 770 or more than that then they can have the most attractive mortgage score. When the credit score goes down then the interest rate goes up. If you want to know the score that which makes you get qualified for the mortgage, then you will come to know that if you have credit score of 620, then you can get the mortgage. In this case, you will get it at the interest rate of 5% but if your score is 770 or above then you can enjoy very low interest rate of 3.4%.
In case your credit score is very bad and you are not being qualified for the mortgage, then you will have to check your credit score. In this way you can improve it whatsoever way it is possible. You can either pay off your pending debts or can check if there are any errors in the report then just correct it.
2. Employed candidates with stable income:
When lenders sanction loan or mortgage to the borrower then they put their money at risk so they have their due right to check the capacity or borrowers. The lenders tend to prefer those candidates which have stable employment history of at least two consecutive years in the past. If you have been unemployed from very long or have instable income even then you cannot get qualified for mortgage.
In case you are a self employed person, then the lenders will put more strict rules on you. Your income will be checked and the lender will ask you to show the tax return of previous two years.
3. Down payment: