How To Get The Best Mortgage Deal
If a recent survey is to be believed, only 30% of mortgage seekers are doing the intelligent thing. Rest do not find the prospect of haggling for mortgage loans enticing. Yet, truth be told, your haggling capacity has direct impact on the mortgage deal you finally secure. After all, why will mortgage houses offer you lower interests or waive fee unless you ask them to do so (and be persistent)?
We think we are too small to negotiate with the lending institutions
Yet, quite oddly, 70% of those seeking mortgage ready themselves to pay what they are asked to. Some of them assume that banks are too big an organisation to be haggled with while others believe that any degree of bargaining won’t amount to much.
What is a smart mortgage deal?
The best mortgage deal does not end with low interest rates. There are many other factors worth considering. This being said, interest rates are definitely the first point to ponder upon. So let me begin with it and then follow it with other prerequisites.
Deal factor #1: Interest rates
Already, the prevailing low cash rate scenario has brought down mortgage rates quite a lot. On top of that, there are various discounts that can further bring down the interest amount you pay on fixed and variable loans.
If you are ready to pay upfront amounts a little higher than the norm for your buying class (First home buyers, Next time buyers, owner-occupiers or investors), you can easily avail still lower interest rates. To reiterate, all you need is to ask for it and then stick to your guns.
Deal factor #2: Fee
There are hordes of fee applicable for mortgage seekers. Life is perhaps most difficult in this regard for the First Home Buyers. Application fee, loan-origination fee, recording fee, inspection cost, appraisal fee only constitute the tip of the proverbial iceberg.
At times, the fee structure can account for nearly 5-7 percent of the mortgage amount. However, you can seek a waiver if you engage the lender in a fluent negotiation. For instance, you can talk about “How I would like to associate myself with other products of your bank, for example, insurance, bonds and deposits”. They will most likely fall for the bait.
Deal Factor #3: Features
Haggle with them to your heart’s content to get as many features incorporated into the mortgage contract as possible. A few of us like to utilize an offset account. It allows you to earn interest on a quasi-savings account and offset part of the outstanding loan balance with it.
Yes, the savings account has to be magnanimous for you to make any inroads into the outstanding mortgage. Those who are not short of funds can use a 100% offset account whereby they target paying the whole mortgage interest with the interest earned on their savings account.
Deal Factor #4: Flexibility
Ask your mortgage agent to give you a thorough sermon on your loan flexibility- your scope of withdrawing funds, foreclosing the loan amount and most importantly, the specifications related to home equity. If you are in your 60s, learn as much about the reverse mortgage options or other equity release products of your loan.
Put your point without fear and do not buzz from your stance
The key, as in any other field of negotiation, is to present your point perfectly, explain the sheer lack of despair on your part and your willingness to keep negotiating till you get what you seek.