Making The Most Of The New Mortgage Application Process

new canadian mortgage application

Over the past year, the federal government and policymakers spent a lot of time and resources to cool off the overinflated Canadian housing market.  These interventions were publicized as necessary for the future stability of the Canadian economy.

The Bank of Canada issued numerous updates over the past year amid concerns the country’s overnight interest rate would increase, and risk destabilizing Canada’s overvalued housing market.  The government was also concerned about the central bank’s warnings, and decided to take the first step by tightening the mortgage lending rules.  These rules made it harder for potential homebuyers – particularly younger, first time buyers – to qualify for adequate home financing.  The government forecast that as fewer buyers remained on the market, home prices would have to decline which will slowly cool off the market.  This intervention was done partially to prevent the Bank of Canada from raising the overnight lending rate, but mainly to reduce the rate of household borrowing.

The new mortgage rules for better or worse had their intended effect on the market.  Mortgage firms reported a lower volume of home financing applicants over the past several months as fewer buyers qualify for a home loan under the new rules.  At the same time, lenders must still qualify a significant number of potential buyers under current mortgage rates, or risk crashing the housing market.

new mortgage process canadaThe problem is these rates don’t benefit the average homebuyer, and under the new rules buyers qualify for less home financing – meaning people now pay more for less.  A mortgage is one of the most important financial obligations because it allows buyers to pay for their houses, but should do so at an affordable cost.  Unfortunately mortgage lending firms will dictate what they feel is a fair and justifiable rate to home financing applicants, particularly now under the tougher rules.

However, there is an easier approach through use of the Internet.  Online comparison websites such as LowestRates allow you to compare mortgage rates from some of the most well-known providers across Canada.  These types of websites operate in the style of one-stop shops similar to Travelocity with flight planning – except for mortgages.  In only minutes online, you can determine what you can afford to pay each month on your mortgage payment, and find the corresponding mortgage rate to ensure you remain on budget.

This is a valuable service because it reduces the amount of your personal time necessary to complete the mortgage application process.  Gone are the days where you had to negotiate back and forth with lenders to agree on ‘fair’ conditions – now, all the information that you need is at your fingertips.  What’s even more important is that you can save money using the modernized approach.  A mortgage firm can’t dictate what it justifies as a fair policy when you apply online, and since you have information on all viable competitors, you can choose where you go and how much you pay.

The housing market is still questionable, but that doesn’t mean it can’t also be beneficial.  The Internet revolution has brought convenience to so many services, and now it helps you save money to acquire a home.


    • Michelle

      Michelle 03/14/2013 7:25 a.m. #

      We're still undecided about whether we should buy a second house or not. UGH!

      • Sicorra

        Sicorra 03/14/2013 3:16 p.m. #

        If you can manage it, go for it!

    • krantcents

      krantcents 03/14/2013 8:40 a.m. #

      I like the idea of comparing rates. It is very similar to shopping bots when you are trying to find the lowest price for a product. Hopefully it will make everyone more competitive!

      • Sicorra

        Sicorra 03/14/2013 10:04 a.m. #

        I think it is a very handy tool as well. I tried it out and it is nice to be able to compare all of the different terms and options without having to speak to a broker right away.

    • DC @ Young Adult Money

      DC @ Young Adult Money 03/14/2013 2:43 p.m. #

      I don't live in Canada, but I know that rates can change quite a bit overnight here in the States. Thankfully there are quite a few tools/regulations that help your lender lock in the lowest possible rate.

      • Sicorra

        Sicorra 03/14/2013 3:15 p.m. #

        It is so important to find the lowest rate, especially when you consider this may be the most money a person ever spends on anything.

    • AverageJoe

      AverageJoe 03/14/2013 3:04 p.m. #

      I'm with KC. Shopping around is important, so why not visit as few places as possible to get as many quotes as possible? Call me lazy.....

      • Sicorra

        Sicorra 03/14/2013 3:13 p.m. #

        I know. Being able to do things online makes things like this so much easier then it use to be.

    • Corina Ramos

      Corina Ramos 03/14/2013 4 p.m. #

      Rates are always changing in the U.S. I've never refinanced but I'm sure those comparison tools would be very helpful deciding which bank to choose for a mortgage.

    • Shannon @ The Heavy Purse

      Shannon @ The Heavy Purse 03/15/2013 11:06 a.m. #

      I love comparison tools and it makes a lot of sense to use to compare mortgage rates. A mortgage for most people will be the biggest loan they take out, so it behooves them to make sure they're getting the best deal possible. I wish the mortgage process was more straightforward, but that's probably never going to happen. :)

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