HOW RISK FACTORS CAN AFFECT YOUR MORTGAGE RATE

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HOW RISK FACTORS CAN AFFECT YOUR MORTGAGE RATE
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• When you shop for a mortgage to buy a home,
  lenders will begin by assessing the level of risk
  that you pose, and depending upon the results of
  their assessment, you could face a higher
  interest rate. Lets look at the risk factors in
  a little more detail
• Are you a repayment or credit risk?
• When lenders are considering your application for
  a mortgage, one of the first questions theyll
  ask themselves, is whether youll be able to
  repay the loan. If you have a high credit score,
  then this can help you fare more positively with
  lenders as it shows that youve been good in the
  past at repaying your debts, and your lower rate
  of interest will likely reflect your lower score.

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• If the mortgage youre applying for is worth more
  than 80 of the value of the property you wish to
  purchase, then youll be required to purchase
  mortgage default insurance. However, as insurance
  protects the lender from the risk of default, you
  might still get a lower rate of interest than if
  you opt for an uninsured mortgage with a bigger
  down payment.
• Are you at risk of higher interest rates?
• In Canada, most mortgage loans are renegotiated
  every 5 years, but their term may be as short as
  6 months, or as long as 10 years. If you
  renegotiate your mortgage frequently more than
  every 5 years then youre unfortunately more
  likely to face the risk of a new interest rate
  being different to the previous one.

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• While it doesnt work for everyone, paying a
  premium to have a fixed rate for a longer term
  (as long as is possible under the circumstances),
  can give you more peace of mind and eliminate the
  risk of having to pay a higher rate of interest.
• The risk of prepayment
• If you repay your mortgage earlier than its full
  term, the lender risks losing money, and this is
  known as prepayment risk. The lender will not be
  able to make as much profit from the funds they
  raised, and this is especially pertinent if
  interest rates have dropped since the beginning
  of the mortgage. Open mortgages allow you to
  repay the entirety of the loan early, and
  typically have higher rates of interest than
  closed mortgages, which place a limit upon how
  much you can prepay.

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• What do these risk factors tell us?
• What each of these potential risk factors show if
  youre looking to buy a property, is that it
  really does pay to shop around. One way of
  ensuring that you minimize risk factors and get
  the best deal for your circumstances, is to use
  the services of a mortgage broker, who will
  review the options available to you from a
  variety of different lenders, not just the big 5
  banks.
• To help eliminate the risk of paying higher
  interest rates for your mortgage, work closely
  with a qualified, reputable mortgage broker, who
  will give you a series of non-biased options to
  choose from.

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• Red Key Mortgage is located in Calgary, Alberta.
  We are a boutique brokerage with high volume
  serving hundreds of clients locally and
  nationwide every year. We have a number of
  associates dealing in mortgages as licensed by
  the Real Estate Council of Alberta. As a mortgage
  broker in Calgary, Red Key Mortgage, will provide
  all of your available options from the entire
  mortgage market and allow you to make an educated
  decision where you'd like your mortgage to go.
  Red Key Mortgage works with big banks in Canada,
  as well as over a dozen other AAA lenders. Best
  of all, our services are paid for by the lenders
  at no additional cost to our clients. If you are
  looking for a best Calgary mortgage broker,
  contact us today! We can't wait to get started.