To have your mortgage at the best rate, you must have the best possible record. Here are 15 criteria that will allow you to get close to the best current loan rates available on the market.
Negotiate your mortgage rate
Before buying an apartment or house, most people find out about current home rates to find out how much they can borrow. The interest rate is one of the most important elements of your home loan. We will see what criteria your banker will hold to offer you the best rate for your mortgage.
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You should not neglect the other elements of your credit and trust only the rate proposed. We must see his loan in its entirety. We will come back after this list of 15 tips to get the best rate possible.
These tips represent only a small part of those that you will find in our method to boost your real estate financing…
15 assets to get the lowest mortgage rate possible
Finance part of your purchase with a personal contribution. You must at least be able to pay the notary fees yourself. The bank will not be the only one to take risks if there are any future problems, it will not finance the property 100%. By reducing the risk taken by your banker, he can offer you a better credit rate.
Zero Rate Loan:
Check if you are eligible for the Zero Rate Loan. If you are eligible, this will allow you to borrow part of the money needed for free. The zero interest loan is considered personal contribution by your bank.
ELP and CEL:
Take advantage of the benefits of your ELP and / or your LTC by taking advantage of the loan entitlements if the rate offered is attractive. These are banking products specifically designed to prepare a real estate purchase.
Other Assisted Loans:
There are other assisted loans that allow you to get ultra-competitive rates for a portion of your loan. Ask your employer if you can benefit from the loan 1% housing for example. These other subsidized loans are also counted in your personal contribution.
Minimize your other credits:
The fewer credits you have, the less risk you have. The bank will therefore accept a larger monthly payment since your debt ratio will be lower. This will also give you, by reducing the risk, an advantage over the calculation of the credit rate.
Limit your debt ratio:
It is customary for banks not to lend more than 33% of your income. That is to say that the monthly payment of your loan must not exceed one third of your monthly income. If your debt ratio is lower and / or you keep a large “remainder to live”, the bank will have an additional guarantee on your ability to cope in case of hard knocks.
Not being exposed during the last months:
If you have not been exposed during the last months before your loan application, it will show that you are able to manage your finances and cover your expenses.
Monitor your current payment capacity:
During the months preceding your loan, prove to your banker that you are able to assume the monthly payment you will have to pay. If you are a tenant, either your monthly payment is equal to or less than your rent or you prove your regular rent payment. Either your rent is lower than the payment of the expected monthly payment or you must show that you are able to save each month the difference “monthly – rent”. For the owners, replace in this reasoning the rent by your current mortgage payment.
Depending on the length of your credit and your age when you subscribe to it, you will have to pay your monthly payments up to a certain age. It is best to make sure you have paid off your loan before you retire. The younger you are, the more you are inclined to work for a long time. But that, of course, is a criterion that one does not master…
Stable work situation:
The stability of your job or job is crucial. You will be more likely to get a better credit rate by being a public servant or on a permanent contract.
- Change banks: Banks compete fiercely and make a lot of effort to attract new customers. This will make it more likely that another bank will make a better offer than your current banker. Unless you are considered an excellent customer, that is, you have many products in your bank. In this case, your bank will surely make an effort to hold you back.
- Compete against banks and credit organizations:
You can take advantage of this competition precisely to negotiate the rate and the best loan conditions by comparing the proposals of different banks or credit organizations. You can do it just by using this mortgage simulation that compares offers from more than 100 banks, it’s free and it only takes a few minutes!
Test different brokers:
The use of a mortgage broker can allow you to play this competition between banks but it is not a guarantee to get the best deals. Nothing prevents you from also putting the brokers in competition!
- To subscribe other products of the bank:
During your negotiation, you can decrease your rate by agreeing to subscribe other products proposed by this bank (insurance, investments, card of payment, etc.). Compare the insurance and other products offered with those you currently have: if the gap is not very important, it may be interesting to change to win a credit cheaper. During the annual renewal, you will then have the opportunity to change again if the product is not very interesting.
Reduce the loan term:
The longer the loan term, the higher the cost of your mortgage. In addition, the longer the duration, the higher the loan rate. You therefore have every interest in limiting the duration of your loan as much as possible! Look at why you have to run out of loans for 25 or 30 years.
Reducing the cost of your credit: to go further
As you may have noticed, the more you will reduce the risk of default on your mortgage, the better you will 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 trust the rate offered to compare two credit offers. The cost of loan insurance is particularly significant and can vary greatly from one bank to another. Moreover you can use the insurance delegation and choose the best insurance borrower.
To have a complete vision of all that includes a mortgage, we advise you to read “Take charge of your mortgage” “our book that teaches you all the techniques and tips to reduce the cost of your financing and get a better credit immovable!