A person cannot take out a mortgage loan if his/her creditor will not approve his/her loan application. Therefore, it is important for a person to have a creditor that can trust him/her. Creditors and lenders are taking a huge risk the moment they decided to approve a certain loan application. Although a mortgage loan is a secured type of loan, there is still no assurance that an individual will be able comply for his/her repayment obligation. Because of this, creditors decided to reflect the risk by implementing higher interest rate. They might approve your loan application but only if you comply with their offered mortgage rates and its interest.

Creditors have different criteria and they refer their mortgage rates Ontario on several factors. As much as they want to get profit through lending their money to those who needs it, they wanted to have an assurance that they will get back their money – if not the full amount, at least a good portion of it. How can they possibly do this? This is through offering different mortgage rates to different people. These rates are determined by several individual factors. These are:

  • The type of mortgage. There are different of mortgages available in the market today with different interest rates. You can choose between adjustable mortgage rate and fixed mortgage rate.

  • Credit score. People with good credit score can get a mortgage loan with lower interest rate. This is because creditors will view you as a less risky individual.

  • Type of properties you wanted to purchase. More often than not, creditors can give lower interest rate on people who wanted to buy a home. This is because there is a lesser chance that an individual will missed paying for his/her loan. Why is this? The answer is simple – a person is always eager to own a home thus they will do everything they can to pay for it.

Knowing these factors will help you understand your mortgage rate more.