Buying a home is one of the most important, and exciting, things you are ever going to do. Buying a home can also be terrifying. It could be the first time you are asking the bank for a mortgage and it could be the first time you need to start engaging with home loans. There are several things you need to do when you negotiate a mortgage, and the first is to make sure you get the cheapest interest rate. It’s all about communication, confidence and negotiation.
Here are a few ways to ensure you get the best interest rate when applying for a home loan.
Ask for a lower interest rate.
When you are dealing with a bank or lending institution, ask questions. Ask exactly how home loans work and ask how to get a lower interest rate. You are making a big investment in buying a home and you deserve to get the best possible deal. If you don’t ask, you won’t get it. Forget your shyness and do not let the bank or lending institution intimidate you. Studies have shown that almost 40% of people who asked their bank for the cheapest interest rate actually got it. Don’t be scared!
It’s a good idea to shop around for your home loan
When you apply for your home loan, do your research. Apply to the bank or lending institution that makes most sense to you and that appeals to you. It may come on somebody else’s recommendation or it may be someone you know. Remember, there is no harm in shopping around. If you are unable to negotiate a decent home loan with your bank, try another bank. Some banks or loaning institutions specialise in home loans and you may find one is more open to negotiation than another. If you are having a rough time with the institution you have chosen to work with, tell them you are going to the opposition. That may be how to get a lower interest rate and they may just make you a better offer immediately.
Talk about bank fees and monthly charges
When you take out a home loan you are also going to be subjected to monthly bank fees. Sometimes these are not discussed. At the same time as negotiating your mortgage, ask about hidden fees. The institution must be up-front about bank fees and you can ask them to lower them. You will find that home loans are always widely advertised by the banks, but the banks never talk about the ‘hidden extras.’ Ask about any other costs that you may not have thought about, ask for a better interest rate, and always ask about monthly charges and bank fees. Negotiate all of these fees – they all make a difference in the long run.
Compare home loans online
It’s important to do your own research on home loans. You can spend a fair amount of time at the bank or lending institution, but you can also do your research online. Look at the various options, check interest and lending rates and see who offers the best deals. Remember, check out the hidden fees too. If you think you are not getting the cheapest interest rate from your bank, ask another bank. Compare all your figures before you make a decision. Remember you deserve to have the better interest rate and there is no harm in asking for it.
Be sure in your decision
When you do make a decision about your mortgage, be sure about it. Switching from one bank or institution to another can be a costly exercise. You want to make sure you are getting the best possible deal from the beginning. Spend time doing your research, check on all the fees and charges, know that you are getting the cheapest interest rate, negotiate as much as you can, and then sign on the dotted line. You do not want to have any regret afterwards – it will cost you too much money. Home loans are big business for the banks and lending institutions and they will want your business. Make sure they look after you and remember, you are entitled to a better interest rate.
Communication is key
Buying a new home is a big deal and applying for a mortgage is a big deal. Unless you are in a huge hurry, take your time with negotiations. Make a list of all the questions you have for your bank, and tick them off as you get answers. Do your research and chat to people about the interest rates that they are paying. Compare interest rates at the different banks. Ask your bank about all the hidden costs and don’t forget to ask about monthly fees. Also, ask about changes in interest rates. You don’t want to sign up for one rate and find out a month later that it has jumped by a few percent. That is why you want the cheapest interest rate from the very beginning. Talking, doing your research, asking questions and communicating with your bank is how to get a lower interest rate. Home loans can be tricky to deal with. You want a bank, or lending institution, that will guide you all the way.
Trust your instinct
Our last point is a salient one. You want a bank or lending institution that you feel comfortable with. Imagine if you don’t have to beg for the cheapest interest rate! Imagine if you are offered the better interest rate from the very beginning. That would be the most ideal situation. Home loans can be stressful and the best bank or institution is the one that helps you, offers you advice and genuinely has your best interests at heart. Sure, you may still have to negotiate a little, and yes you must always ask for the better interest rate, but go with the money lenders that make you feel good, secure and confident in the decisions you are making.
Biljana is Digital Marketing Manager for BestFind. BestFind is an Australian comparison website for personal and business financial products. We make it our mission and goal to provide the simple, comprehensive and transparent data for financial products from many of Australia’s financial institutions.