2023-06-19 02:00:00
This week the ECB announced another rate hike. In a few weeks, households will have to borrow money by making a loan whose rate is around 4%. Fortunately, there are a few tips and advice to help you get the best possible rate for your home loan.
Increase your personal contribution
A larger personal contribution is often synonymous with better credit conditions. Banks generally impose a minimum deposit of 10%, but if you can increase this deposit to 20% or 30%, you will be considered less risky by lending establishments and will therefore have a better chance of obtaining a good rate.
Improve your debt capacity
Debt capacity is an essential element in the evaluation of your mortgage application. It takes into account your income, your expenses and your current level of indebtedness. To improve your debt capacity, it is advisable to:
- Reduce your existing debts (for example, repay your consumer loans)
- Increase your income (for example, by getting a raise or working part-time)
- Reduce your expenses (by reducing your current expenses)
Negotiate the interest rate
It is sometimes possible to negotiate the interest rate offered by your bank. Although this practice is less common than before, it may be worth trying to negotiate with several lending institutions to obtain the best possible rate.
Play the competition
Compare mortgage offers from different banks and brokers is a crucial step in finding the best rate. Do not hesitate to ask for quotes from several establishments and to put them in competition. This might allow you to obtain a better rate.
Get help from a mortgage broker
A mortgage broker is a professional who helps you find the best rate for your mortgage. He knows the market well and has a network of banking partners, which allows him to effectively negotiate the terms of your credit. Using a broker can save you time and money.
Choose the term of the loan
The term of your home loan has a direct impact on the interest rate. In general, the shorter the loan term, the lower the interest rate. However, it is important to carefully assess your ability to repay the loan over a shorter period, as this implies higher monthly payments.
Opt for a variable or fixed rate
The choice between a variable rate and a fixed rate depends on your preferences and risk tolerance. A variable rate can be attractive if you think interest rates will go down in the future, but it is also more risky since it can go up. A fixed rate offers more security, with constant monthly payments throughout the loan.
Obtaining the best rate for a mortgage requires preparing your file well, comparing the offers of different lending institutions and considering the duration of the loan and the type of interest rate. Do not hesitate to be accompanied by a mortgage broker to put the odds on your side.
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