Navigating the mortgage market can be challenging, especially in a dynamic and competitive area like the Greater Toronto Area (GTA). With mortgage rates in Ontario finally trending lower, it’s crucial for home buyers, sellers, and investors to avoid common pitfalls to secure the best mortgage deals. Here are four key mistakes to steer clear of when shopping for a mortgage in the GTA.

1. Skipping Mortgage Preapproval

Starting your home search without a mortgage preapproval is like going in blind. A preapproval provides a clear picture of how much you can borrow and at what rate, helping you narrow down your search to homes within your budget. It also locks in your rate for 90 to 120 days, protecting you against potential rate hikes. In the competitive GTA market, sellers often prefer buyers with preapproval, ensuring your offer stands out. Getting preapproved is a vital first step to set yourself up for success.

2. Accepting the First Rate from Your Bank

While it might seem convenient to go with your bank’s first mortgage offer, shopping around for mortgage rates in Ontario can save you thousands. Canada’s Big Six banks dominate the market, but they may not offer the best rates. Explore options from credit unions and smaller lenders, and consider using a mortgage broker who can compare rates on your behalf at no cost. Even if you prefer sticking with your bank, having alternative offers as leverage can help you negotiate better terms.

3. Automatically Renewing with Your Current Lender

When your mortgage term ends, it might be tempting to renew with your current lender to keep things simple. However, lenders often reserve their best rates for new customers, not renewals. Start the renewal process early—up to 120 days before your term expires—and compare your options. Treat your renewal as an opportunity to reassess your mortgage needs and potentially secure better terms or pay off your mortgage faster. Remember, even with the need for a new stress test if you switch lenders, the long-term savings from a lower rate can be substantial.

4. Locking into a Long Fixed Rate

Fixed mortgage rates provide stability, which is why many Canadians prefer them. However, with mortgage rates in Ontario currently trending lower and further cuts expected, locking into a long-term fixed rate could mean missing out on future savings. Shorter fixed terms, like two or three years, offer more flexibility to adjust your mortgage as rates drop. According to the latest data, more borrowers are opting for shorter terms, anticipating lower rates in the near future.

Conclusion

Securing the best mortgage involves careful planning and research, especially in the fast-paced GTA market. By avoiding these common mistakes—skipping preapproval, accepting the first rate, automatically renewing with your lender, and locking into a long-term fixed rate—you can better navigate the mortgage landscape and make more informed decisions. Stay proactive, compare your options, and consult with mortgage professionals to find the best mortgage strategy for your needs. Understanding mortgage rates in Ontario and staying informed can help you achieve your real estate goals.