How to Get the Best Interest Rate When Buying a Home

If you’re thinking about buying a home—especially in today’s market—you’re probably wondering how to secure the best possible interest rate. Even a small difference in your mortgage rate can add up to thousands of dollars in savings over the life of your loan.

I’m Lisa Salt with RE/MAX Vernon Salt Fowler, and today, I’m sharing three proven strategies to help you lock in the lowest interest rate when purchasing a home. Whether you’re a first-time buyer or an experienced homeowner, these tips will put you in the best position to save.

1. Improve Your Credit Score

Your credit score is like a financial report card, and lenders use it to assess your risk level. A higher score can lead to lower interest rates, potentially saving you thousands. Here’s how to boost your credit score:

• Pay down your debts – Focus on reducing high-interest credit card balances and other outstanding loans.
• Make payments on time – A single missed payment can negatively impact your score.
• Keep old credit accounts open – A longer credit history helps strengthen your score.
• Monitor your credit report – Mistakes can happen, so check regularly and dispute any inaccuracies.
• Limit hard inquiries – Applying for multiple credit cards or loans can lower your score, so be strategic about new credit applications.

One bonus tip: If you plan to buy a home soon, avoid applying for new credit or loans right before shopping for a mortgage. Hard inquiries can temporarily lower your score, so give yourself a few months to let your credit settle.

2. Shop Around for the Best Lender

Many buyers make the mistake of going straight to their bank or sticking with the first lender they find. But interest rates can vary significantly between lenders, so it’s important to explore your options:

• Banks – While many buyers choose their bank, it may not always offer the lowest rates. However, banks sometimes provide loyalty discounts to existing customers, so be sure to ask.
• Credit Unions – Member-owned institutions often offer competitive rates and more flexible terms than traditional banks. They may also work with buyers who have unique financial situations.
• Mortgage Brokers – Brokers have access to multiple lenders and can often negotiate better rates for you. They also specialize in finding customized mortgage solutions that fit your needs.

Pro tip: Get pre-approved by multiple lenders and compare not only the interest rates but also the loan terms, hidden fees, and prepayment penalties. Sometimes, a slightly higher rate with better terms can save you more in the long run.

Additionally, keep an eye on market trends. Interest rates fluctuate based on economic conditions, so timing your application when rates are favourable can make a big difference.

3. Consider Your Down Payment and Loan Term

How much you put down and the length of your loan term can also affect your mortgage rate. Here’s what to consider:

• Increase your down payment – The more you put down, the less you need to borrow. In Canada, a down payment of 20% or more eliminates the need for mortgage insurance, which can lead to significant savings.
• Shorten your loan term – While 25-year amortization is common, opting for a shorter term (such as 15 or 20 years) can lead to lower interest rates. Though monthly payments may be higher, you’ll save on interest in the long run.
• Look into rate buy-downs – Some lenders allow you to pay an upfront fee to secure a lower interest rate. This can be a smart move if you plan to stay in your home long-term.

Finally, decide between a fixed-rate or variable-rate mortgage. Fixed rates offer stability, while variable rates often start lower but can fluctuate over time. Discussing these options with your lender or broker can help you make the best choice based on your financial situation.

Bonus Tip: Work with a Knowledgeable Real Estate Agent

A real estate agent who understands the mortgage process can be a valuable resource in securing the best rate. We do this every day and have connections with lenders who may offer better terms than what you’d find on your own. Best of all, as a buyer, working with an agent is free!

If you’re looking to buy a home in the North Okanagan or Shuswap area, my team at RE/MAX Vernon Salt Fowler is here to help. Reach out anytime, and let’s find the best home—and the best mortgage—for you!

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About the Author: The article above, 3 Proven Ways to Get the LOWEST Mortgage Rate When Buying a HOME in Vernon BC, was provided by Lisa Salt, an authority on Vernon BC and area real estate and a leader in the field of real estate blogging and vlogging.  Lisa and her group have helped literally helped thousands of families buy and sell homes since 1993. 

Looking to buy a home in the Vernon/North Okanagan area?  Check out "Everything You Need to Know About Buying a Home" article. It’s free of charge and will save you a ton of time!

Looking to sell?  We use the latest technology to get our clients’ homes sold quickly and for as much money as possible.

We help people buy and sell real estate in the following Okanagan/Shuswap areas: Vernon, Armstrong, Enderby, Lake Country, Lumby, Westside and Salmon Arm/Shuswap.

Call or Text 250-549-7258 or email webinfo@saltfowler.com