To get your mortgage at the best rate, you need to have the best record possible. Here are 15 criteria that will help you get closer to the best current loan rates available in the market.
Negotiate its mortgage rate
Real estate sector before buying an apartment or house, most people learn about current real estate rates. To find out how much they can borrow. The interest rate is one of the most important elements of your home loan. So we will see what criteria your banker will retain to offer you the best rate for your mortgage.
You should not neglect the other elements of your credit and rely only on the proposed rate. One must see its borrowing in its entirety. We will return to this list of 15 tips to get the best rate possible. These tips are only a small part of what you will find in our method to boost your real estate financing.
15 assets to get the lowest possible mortgage rate
1. Personal contribution: Finance a part of your purchase with a personal contribution. You must at least be able to pay for yourself the notary fees. The bank will not be the only one to take risks if there are any problems later, it will not finance the property 100%. By reducing the risk taken by your banker, he will be able to offer you a better rate of credit.
2. Zero Loan: Check if you have the right to zero-rate loan. If you are eligible, this will allow you to borrow a portion of the required amount of money free of charge. The zero-rate loan is considered to be a personal contribution by your bank.
3. PEL and CEL: Take advantage of the benefits of your ELP and/or CEL by taking advantage of the loan rights if the proposed rate is attractive. These are banking products precisely planned to prepare a real estate purchase.
4. Other loans helped: There are other loans helped that allow you to get ultra-competitive rates for a portion of your loan. Ask your employer if you can avail the 1% housing loan for example. These other subsidized loans are also counted in your personal contribution. Click here to find out more about these helpers!
5. Minimize your other credits: The less you have credits in progress and the lower the risk of non-repayment. The bank will, therefore, accept a higher monthly payment since your debt ratio will be lower. This will also give you, by lowering the risk, an advantage over the calculation of the credit rate.
6. Limit your debt ratio: It is customary that banks do not lend to more than 33% of your income. That is, your monthly loan should not exceed one-third of your monthly income. If your debt ratio is lower and/or you keep a significant “remainder”, the bank will have an additional guarantee on your ability to cope in the event of hard hits.
7. Not having been overdrawn in recent months: If you have not been short during the last months before your loan application, this will show that you are able to manage your finances and bear your expenses.
8. Monitor your current payment capacity: During the months preceding your loan, prove to your banker that you are able to assume the monthly payment that you are going to have to pay. If you are renting, either your monthly payment is equal to or lower than your rent and you prove your regular rent payment. Either your rent is less than the payment of the monthly payment and you must show that you are able to save monthly the difference “monthly rent”. For homeowners, replace in this reasoning the rent by your current monthly mortgage loan.
9. Borrow young: Depending on the length of your credit and your age when you buy it, you will have to pay your monthly installments to a certain age. It is best to ensure that you have finished repaying your loan before you retire. The younger you are, the more likely you are to work for a long time. But that, of course, is a criterion that one does not master …
10. Stable employment situation: The stability of your job or job is decisive. You will have a greater chance of getting a better credit rate by being a public servant or on a permanent contract.
11. Changing banks: Banks compete strongly and make great efforts to attract new customers. You will thus be more likely to have a better proposal from your bank than your current banker. Unless you are considered an excellent customer if you have many products in your bank. In this case, your bank will surely make an effort to hold you back.
12. Compete with banks and credit agencies: You can take advantage of this competition to negotiate the rate and the best lending conditions by comparing the proposals of different banks or credit institutions. You can do it simply by using this simulation real estate loan that compares offers from more than 100 banks, it’s free and it only takes a few minutes!
- Testing different brokers: Using a mortgage broker may allow you to have this competition between banks, but it is not a guarantee to get the best deals. Nothing prevents you from also putting the brokers in the competition!
Subscribe to other bank products: During your negotiation, you can reduce your rate by agreeing to subscribe to other products offered by this bank (insurance, investments, credit card, etc.). Compare the insurance and other products offered by the ones you currently have: if the gap is not very large, it may be worthwhile to change to obtain a cheaper credit. At the annual renewal, you will then be able to change again if the product is not very interesting.
Reduce the duration of borrowing: The longer the borrowing time, the higher the cost of your mortgage. In addition, the longer the term, the higher the loan rate. Therefore, it is in your interest to limit the duration of your loan to the maximum! Look at why you need to get away from loans for 25 or 30 years. Reducing the cost of your credit: to go further As you may have realized, the more you reduce the risk of default on your mortgage, the better you get.
On the other hand, each bank defines its own criteria: optimize all of these tips and you will have a better chance of lowering your rate! Be careful, however, not to rely on the proposed rate to compare two credit offers. The cost of loan insurance is not insignificant and can vary greatly from one bank to another. Besides, you will be able to use the delegation of insurance and choose the best insurance borrower.