When signing a mortgage, the borrower’s first wish is to pay as little as possible. Instantly, he will think about the rate of his real estate bank loan to have the most advantageous loan possible.
But in a context where bank interest rates are at their lowest, it is good to activate other levers to lower the cost of your mortgage overall. We make it theirs in 5 tips and tricks.
1 – Negotiate a favorable interest rate
We put this advice in number 1 because it addresses the primary concern of mortgage borrowers. To lower the interest rate on your credit, it’s no secret: having an impeccable record is the first rule to follow.
To this end, highlight in your file all of the following:
- Your personal contribution: to claim a lower rate, it is fashionable to provide at least 10% of the total amount of the property acquisition
- Your savings: your ability to save has value and shows your good risk management, if you have an investment (passbook, life insurance, PEA, etc.), do not hesitate to edit the account statements to show your banker your rigor regarding the frequency of payments
- Your account statements: depending on the financial institutions, your account statements for the last 3 to 12 months will be scrutinized, make sure you have no overdraft, commissions, intervention costs, etc.
- Balance your consumer loans: if you have personal loans, now is the time to close them to mechanically lower your debt ratio
Finally, always remember to compare and play the competition before pushing the front door of banking institutions. A simple online mortgage simulation will guide you to the best rates offered to facilitate negotiations.
2 – Shorten the duration of your mortgage
The less your mortgage, the lower the bank interest rates. Shortening the term of your mortgage by a few years will save you thousands of euros.
However, you must still maintain a reasonable debt ratio, which preferably does not exceed 33%, in order to receive a favorable response to your mortgage loan file.
Have the reflex to always compare the APR (Annualized Global Effective Rate), expressed as a percentage, because it includes not only the bank interest rate, but also the ancillary costs of the loan. You can also compare the overall cost of the loan, expressed in euros.
3 – Reduce additional costs
With relatively low interest rates, your room for maneuver is limited and cannot impact the borrowing rate by a few tenths of a point. So, do not hesitate to lower the additional costs:
- Application fees: from around a hundred to a thousand euros, these are the “administrative” fees charged by the bank to make the time spent preparing your file profitable, but they can be reduced or even canceled
- Guarantee fees: it can be a mortgage, a privilege of money lenders or even a bank guarantee, know that the latter is generally more interesting and avoids the release costs
Among the additional costs that inflate the total cost of your credit, there is also borrower insurance …
4 – Compare borrower insurance
A mortgage systematically involves from the bank a request for a guarantee as to the payment of maturities in the event of default by the borrower. The borrower insurance allows you to face in the event of job loss, incapacity, disability or death and takes over with the bank, which sees the loan deadlines honored.
The good news ? Borrower insurance can be taken out on a delegation basis. This means that you are free to go to the insurer of your choice without having to subscribe to your bank’s borrower insurance contract. These are hundreds, even thousands of dollars of savings possible over the life of your mortgage.
To find the best borrower insurance, the best is still to compare the offers of insurers thanks to an online comparator. Note that you can also change borrower insurance on each anniversary date of your contract, so it’s never too late to reduce the cost of your credit!
5 – Giving importance to people
You have carried out a mortgage simulation and have an appointment in several banks? Is your file complete and your supporting documents close at hand? It’s a great start, but that’s not all …
Make a good first impression by showing that you are not neglecting your project. Plan ahead, don’t forget any documents. Also take care of your appearance and your language. Keep in mind that any negotiation requires a dialogue between two interlocutors.
Be confident and serene in front of the bank advisor, he will feel it and be able to favorably support your file with his hierarchical superior, quite simply because you have inspired him with confidence and are an ideal client.
Of course, this does not always go as planned, but there are many bank branches, including within the same brand. Do not hesitate to see several banks until the human report makes the difference.