Strategies To Brighten Your Borrowing prospects

 bank borrowingsLending institutions are there for a purpose. It is their duty (and their business interest too) to forward us loans. However, it is not their responsibility to tell us what loan arrangement may suit us best. Thus is it important to conduct one’s homework and be as inquisitive as possible when dealing with banks and other lending institutions. Let me try and focus on a few areas which buyers will do well to be informed about.

Are you prepared for a spike in mortgage rates?

We have an environment of very low interest rates today. You may argue to your heart’s content that the rates are close to their historical averages but we all know that sooner or later they will go up. In fact, many lenders have started increasing their fixed rates, a sign that cash rates are going to revert in some time from now.

So all those of us who are planning to make the kill at present mortgage rates should learn in advance about the fate of their mortgage commitments once the rates go up.

Do you ask enough questions?

Oftentimes, we do not get the best deal just because we don’t ask for them. Banks are not charitable organisations. Even if there are prepared to waive off a minor cost or reduce a particular fee, they will not come out in the open with the idea. Yes, if you ask them to do so they won’t think twice before doing you the favour.

Banks like customers who ask less questions but are perfectly prepared to make negotiations with those customers who ask plenty of questions and seek a lot of bargains. So the rule to follow is- ask for rebates and cuts.

Do you pay your mortgage fortnightly?

If you can, pay your mortgage every 15 days instead of once in a month. You will be surprised to know that fortnightly payment clears your principle quickly and allows you to generate higher equity in a shorter time (great news if you want to invest in another property).

Do you research on possible loan-switches?

Always be prepared to switch loans. Just keep hunting for the best deals and make switches when conducive. Also, remember that you have different liabilities to the bank when you seek loans for your principal place of residence and when you seek it for a property investment.

Ideally, you should learn about your specific loan arrangement and look for possible switches at times when you can derive maximum benefit through them.

These are just a few tips but if you care to go through them and use Due Diligence from your side, you will only brighten your borrowing prospects.

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