When we talk about mortgages, we often think exclusively in terms of rates.
Focusing all your attention on the interest rate is a mistake because getting the best home loan is not only about negotiating the lowest rate with your bank, it is also about discussing additional conditions and borrower insurance. .
We give you our advice to negotiate the best mortgage.
The best home loan: rates, conditions and additional costs and loan insurance
Get the lowest interest rate
Interest accounts for most of the total cost of your loan. Thus, it is essential to obtain the lowest interest rate according to your profile.
Of course, real estate interest rates depend on the economic situation, but the one granted by the bank for your project is directly correlated with:
- The type of loan chosen (repayable at fixed or variable rate or in fine)
- The duration of your loan
- The region you are borrowing from
- The amount of your contribution
- Your borrower profile (co-borrower or not, age, income, etc.)
If you don’t have the “ideal” borrower profile, don’t panic! There are solutions to make it more attractive to banks.
First of all, keep in mind that your file is your borrower CV. The more it will be clear, solid and organized, the more likely you will be that the bank will offer you an attractive financing offer.
To do this, absolutely avoid bank overdrafts, present savings to the bank even if you do not wish to use them and, if you have the possibility, pay off your consumer credits.
Obtaining the lowest real estate interest rate is decisive, but it is not enough. It is necessary to look into the additional elements and the loan insurance.
The best home loan is an advantageous loan at all levels: application fees, repayment penalties, direct debit,…
The application fee are the costs claimed by the bank for the analysis and processing of your financing request. On average, they are between €500 and €1,500. The administration fees are negotiable: the best home loan has little or no fees.
Calling on a real estate broker is a strong argument in the negotiation of these application fees because it relieves the bank of part of its work of editing and analyzing your file. If it’s free, as Pretto real estate brokers are, you have everything to gain: no brokerage fees, less or no application fees!
The prepayment allowances (IRA) are penalties applied by the bank to offset the interest that you will not pay them by repaying your loan before its term. They generally represent one semester of interest at the average credit rate and are capped at 3% of the outstanding capital.
They are defined when the loan is taken out. It is therefore at this time that the possibility of making early repayments must be made under the best possible conditions.
If it is difficult to remove them completely, the solution may be to limit their scope. For example, try to negotiate their cancellation after a certain period (10 years for example) or in the event of total reimbursement following a sale,…
About the domiciliation of your wages, know that legally you are no longer required to collect your wages in the same establishment as the one that grants you a loan. However, if you want to get the best home loan, you can’t escape it… Preferential conditions against direct debit of income: it’s give and take.
Insofar as you will have to open a current account for the collection of monthly payments with your lending bank, it may be good to find out about the account maintenance fees of it.
Finally, the feeling you have with the bank and your adviser is also important insofar as you engage with them for a significant period of time.
Loan insurance is not an option, it is required by the bank for anyone wishing to obtain a mortgage.
What is not mandatory, however, is to subscribe to it with your lending bank. Indeed, you are now entitled to the delegation of insurance. And the game can be worth the candle because some organisations, unlike banks which generally offer group contracts, offer more suitable and competitive contracts, especially if you are under 35, in good health and non-smoker.
Indeed, loan insurance occupies an important place in the cost of your credit: it can represent up to 30% of the total cost of your loan.
However, you should not only think about the price when looking for your loan insurance, you must also think in terms of guarantees.
After all, loan insurance is there to protect you against the vagaries of life that could prevent you from repaying your loan until its term.
Play the competition
No secret to getting the best home loan: you have to compete.
Go around all the banks, scan and compare their offers to find the most interesting.
Compare offers from generalist banks
Very often, the first instinct of the future borrower is to go to his current bank. It’s a good reflex insofar as your adviser knows you and can make you an initial proposal, but you shouldn’t stop there.
Banks see real estate credit as an effective loss leader and are fighting a real battle to glean new customers and are ready to offer very attractive rates for you to choose.
Go to online banks
More and more online banks are offering mortgages. In search of new customers, the offers they offer can be advantageous.
Call a mortgage broker
Going around the banks to present your loan file and compare their offers can, beyond the skills it requires, take a considerable amount of time.
Fortunately, there are professionals called mortgage brokers who do this job for you.
Whether traditional or online, real estate brokers are your secret weapon for finding the most interesting loan offer adapted to your situation.
However, watch out for the fees! If you’ve ever thought about getting help from a real estate broker, you’ve probably heard of the famous brokerage fees. Be aware that they are not automatic: some brokers are remunerated exclusively by banks as business introducers. This is particularly the case with some online brokers like Pretto.
Find out about your broker’s compensation method before you start the process.
Read also: Obtain credit for sure: how to do it?