If you want to get approved for the lowest mortgage interest rate in Canada then you are going to have to ensure that you are in tip top financial shape.
The lowest interest rates are offered to consumers who have excellent credit and a strong financial profile. So how do you know if that’s you?
First, request your credit report from Equifax. Lenders want to see that you have a minimum credit score/FICO score/Beacon Score of 680. Other things that are revealed on your credit report (even if your credit score exceeds 680) that the bank will frown upon are: 1. Too many applications for credit 2. Late payments 3. Too many credit products 4. Credit products that are near, at or over their limits
They also want to see that you can prove your income. Typically the bank will ask you to provide a T4 or paystub if you are employed. If you are self-employed the bank may ask you to provide two years of tax assessments.
They will also want to see that you have good stability and that your monthly payments to credit do not consume too much of your income. Your debt service ratios are calculations that your bank uses to measure what percentage of your gross income is consumed by housing and debt payments. As a rule of thumb your housing payment should not exceed 30% of your gross income and your housing payments plus consumer debt payments should not exceed 40% of your income.
These are all things that you should think about before you start shopping for a mortgage. Many consumers only approach a mortgage broker when they want a mortgage. A mortgage broker is an excellent resource to help you look at your financial profile and find ways to improve it so that you can qualify for the lowest mortgage interest rates that are offered in Canada.