How to negotiate the rate of your mortgage

You have a real estate project and want to borrow at a lower cost given your file. Your first instinct is to get a favorable interest rate . In addition to reducing the repayment period , you can also discuss with the bank so that it grants you more favorable conditions. In this article, we review the most effective arguments for negotiating the rate of your mortgage . You will also find some strategic advice as well as additional ways to limit the total cost of your loan .

The levers to negotiate your mortgage rate

Banks lend more easily to applicants with a reassuring profile. Here are the elements that, according to them, constitute a good file.

Propose a significant personal contribution

In general, the bank asks the borrower to bring a sum representing at least 10% of the amount of the purchase. This contribution finances the ancillary costs that the lending institution does not cover.

A high down payment is an excellent bargaining chip when discussing your mortgage rate. The bank appreciates this starting capital: it demonstrates your ability to save money and reassures it about your ability to repay the loan.

Present well-kept accounts

Be vigilant in the months preceding the negotiation of the rate of your mortgage. The bank will ask you to provide them with your latest bank statements to verify how you are managing your budget.

Accept a new direct debit

The repatriation of your accounts in its establishment often proves to be an interesting long-term operation for the bank.

The latter cannot force you to change your bank address when you take out a mortgage. But agreeing to it can help you obtain a more favorable interest rate for your loan.

The bank has only one desire: to turn you into a loyal customer! It can thus offer you all of its services.

By mentioning your interest in its financial products, you send it another positive signal. An additional argument to negotiate or renegotiate your mortgage rate lower.

 Expose the strengths of his profile

The home loan commits you for a significant period of time. It is therefore important to show that your situation is stable in the long term.

The bank will review your latest payslips. Also present your recurring bonuses if they are not on the payslips provided. Don’t forget to mention any additional income.

As a general rule, banks prefer borrowers who are civil servants or who have a permanent contract. If you are not an employee, try to prove the sustainability of your income.

Your general situation can be an additional advantage in negotiating a better rate. If you are just starting out in life, a great career is likely waiting for you, accompanied by a substantial increase in your income. Here is also a point to remember: after a few years, you will probably be able to renegotiate the rate of your mortgage, reduce the duration or increase the amount of your monthly payment.

In short, look for anything that is likely to reassure the lending institution and take advantage of it!

You know the arguments that will hit home. Here are the steps to follow to increase your chances of convincing the banks.

The mechanism of the home loan sometimes seems complex. Make sure you understand this before you start the negotiation.

The APR ( Global Effective Annual Rate )

It includes the nominal rate (interest rate of the credit) as well as the various costs, related to the study of the file, the guarantee and the borrower insurance. Not to mention the account opening and maintenance fees that the bank could charge you if you decide to repatriate your assets to its establishment.

This rate therefore summarizes all the costs relating to your mortgage. It is essential to know what it covers to negotiate effectively.

The accumulation of the costs imposed could indeed make your credit less competitive than that offered by a competing bank, even if, a priori , its nominal rate seems more interesting.