There are many factors involved in securing the right mortgage rates, and for many people that are just beginning the search, it can be daunting.
If you’re just a first-time home buyer or are just looking for extra mortgage tips, CIBC has a range of helpful services they can offer. With the option of choosing either a fixed-rate mortgage or a variable rate mortgage based on CIBC’s prime rate, there are benefits to each one.
Additional Offer And Bundles From CIBC:
- CIBC Home Power Plan: The CIBC Home Power Plan gives you the opportunity to combine a mortgage along with a line of credit based on your home equity to continue to enjoy the access of funds at a lower interest rate. You are able to access up to 85% of the value of your residence and then consolidating debt into one monthly payment.
- CIBC Wealth Builder Mortgage: With this option, you can invest in your savings while still being able to pay off your mortgage by gaining money upfront and all throughout the term of your mortgage.
- Cash Back Offer: On CIBC fixed mortgage rates and variable rate mortgages of over 3-years, you can get cashback offer.
What Am I Able To Afford?
Don’t forget to calculate exactly how much you can afford before you start looking for a dream home, which is why we suggest using the affordability calculator at Bestmortgagerates4u.ca.
After knowing your ideal monthly return, you’ll know how much you’ll need to pay down. Saving up income for a down payment is an important part of the process of purchasing a home. The amount of your down payment will influence how much you qualify for a mortgage. The minimum down payment in Canada is 5 percent on the first home price of $500,000, and 10 percent on any portion that exceeds $500,000, up to $1 million. A home priced above $1 million requires a minimum of at least 20 percent down.
One stipulation that buyers need to be aware of is that they have to buy mortgage default insurance when they put down less than 20 percent of their home’s price. If you can put more than 20 percent of your home purchase down, you will be eligible for a conventional mortgage product from your lender. If not, expect to pay an additional premium of 0.50–2.75% of the mortgage value, depending on your loan-to-value ratio (LTV) and amortization period.
The additional costs that come after the offer has been accepted are part of the affordability that normally does not spring to mind when you start looking for a home. The price of things can really add up fast. From the closing costs and property taxes to the overall cost of living, purchasing a home isn’t cheap!
Is It Recommended To Work With A Bank Or A Mortgage Broker?
With their mortgage needs, prospective home buyers may turn to their bank or mortgage broker, but many people aren’t even sure what to look for or what would be the most appropriate service for their needs.
When it comes to negotiations, by going to the bank, home buyers go straight to a lender and behind the wheel. When you decide to work with your bank, all of the services are combined with a company you have worked with and trusted, and you may be eligible for discounts.
On the other hand, a broker gives home buyers the advantage of having access to a number of discounts provided by various lenders and they do the research and negotiate for you to secure the best price and terms offered on the market.
In a lot of cases, brokers will not always offer the same rates as the banks, hence we provide very comprehensive mortgage rate comparisons in Canada. We compare different brokers, banks, credit unions, and other lenders.
Do I Get A Variable Or Fixed Mortgage?
When you are on the lookout for the home of your dreams, you’ll have to decide about choosing a fixed or a variable mortgage.
A fixed mortgage rate gives you the ability to “lock-in” a predetermined rate for a term (set time period). Although you can get one that can last anywhere from 6 months to 25 years, the most popular term is 5 years.
Benefits Of A Fixed Mortgage Rate:
- Added security in knowing that your principal and interest amounts won’t change for the duration of the term
- Budgeting and financial planning are much easier
- There is a lower risk involved
Downsides Of A Fixed Mortgage Rate:
- The cost will be more for securing and locking at a certain rate
- If you break the contract, you will end up paying more and this will result in a high long-term cost
The variable mortgage rate will be based on the mortgage lender’s prime rate and the prime rate is based on the current economic conditions. This is the benchmark interest rate that is used by the big banks when they are pricing out short-term loans. The prime rate can go up or down on a monthly basis and as a result, the variable mortgage rate could go up or down as well.
Benefits Of A Variable Mortgage Rate:
- As long as the prime rate doesn’t go up, then the monthly payments will be lower
- You will be paying three months of interest charges if you break the contract
Downsides Of A Variable Mortgage Rate:
- Lower financial security because if the prime rate increases, so does the monthly interest
- Budgeting and financial planning is harder to do
The amortization period refers to your mortgage’s entire length of term, whether it is a short-term or long-term mortgage. A lot of mortgages are negotiated over a period of 25 years.
There will be a set of agreed terms for a number of years over those 25 years. The most common length of a mortgage term is five years, which means you pay the principal and interest for five years at a negotiated rate, and negotiate another five-year term after that.
Will My Credit Score Have An Effect On Mortgage Pre-Approval?
Is your credit rating ready to be approved for a mortgage? Your credit score is crucial because it is what is used to determine whether you will get approved for a mortgage and for how much. Lenders want to believe that you are going to repay your loans, so they consider the following factors: payment history, outstanding debt, age of credit history, too often applying for new credit, and the type of loan you are aiming for (long-term debt vs. short-term debt).
Want to see more CIBC Fixed Mortgage Rates? Click Here to see CIBC Fixed and Variable Mortgage Rates.