What actually sets the mortgage rate you are offered

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The number in the advertisement is not an offer. It is the best case, for the strongest file, on the narrowest product. Most buyers find that out late, usually after they have already told themselves what their payment will be. The rate you are actually offered comes out of your file, and the file has more inputs than most people expect.

I am licensed on the lending side as well as the real estate side, so I see both halves of this. What follows is how the pricing is built, not what you should do about it. The decision belongs to you and to whoever is arranging your financing.

The advertised rate is a headline

An advertised rate carries conditions that rarely appear beside it. It usually assumes a particular term, a particular amortisation, a particular kind of buyer and a particular kind of property. Change any one of those and you are looking at a different product with different pricing.

That is not a trick. It is a lender describing one point on a grid and letting you assume it is the whole grid. Ask which conditions the advertised number assumes, and you turn a headline back into something you can compare.

The lender is pricing risk, and you are most of it

Underwriting is an assessment of how likely the loan is to be repaid on schedule. Everything that moves the rate is a proxy for that.

Credit history is the obvious one, and it is more than a score. It is how long the file goes back, whether payments arrive on time, how much of your available credit you use, and how recently you opened things.

Income matters less as a number than as a shape. Salaried income that has been steady for years reads differently from self-employed income, commission income or income that has just changed form. It is not that one is better. It is that some are faster to verify, and verification is what the lender is buying.

The size of your down payment relative to the price changes the product entirely, which is the next section.

Amortisation matters because a longer one lowers the payment and lengthens the exposure. Term matters because you are paying for how long the rate is fixed.

Insured and uninsured are two different products

This is the part that surprises people most, and it is worth getting straight before you look at any rate.

When a down payment is below a threshold set by regulation, the mortgage generally has to carry default insurance. That insurance protects the lender, not you, and the premium is normally added to the loan. Above that threshold the mortgage is uninsured, and there are also insurable arrangements in between.

The counterintuitive part is that an insured mortgage is not automatically the more expensive one to price. The insurance transfers risk away from the lender, and lender pricing can reflect that. What changes is not simply better or worse. It is that you are in a different product, with different rules about amortisation, property type and refinancing later.

I will not put the threshold in writing here, because it is set by regulation and it moves. Ask what it is today, and ask which side of it your file sits on.

The property is part of the file

Buyers tend to think qualification is about them. The lender is also underwriting the property, and it can change the pricing or end the conversation.

Whether you will live in it matters, because an owner-occupied home and a rental are priced differently. The type of property matters: a detached house, a strata unit, a converted building and a property on acreage do not all present the same risk. In a strata, the lender may look at the building itself, not just your unit. Location matters, because resale liquidity is part of the security.

This is also why a pre-approval is not the end of the process. The lender approved you. It has not yet approved the specific home you go on to write an offer on.

The questions worth asking

Rather than asking what the rate is, the more useful questions are these. Which product does my file actually fall into, and why. What is this quote assuming about my term, my amortisation and my down payment. What would move it, in either direction. What has to be verified before this becomes real, and how long is anything held for. And what happens to this rate if the property I choose is not the kind the quote assumed.

Those questions get you a comparison you can trust. A rate on its own does not, because you cannot see what it assumes.

General educational content, verify property-specific details and consult qualified professionals when appropriate.

Thinking about buying or selling in the Fraser Valley? Message me and we will go through your options.