One should focus on planning to improve the odds of securing lower mortgage loan interest rates. There are various factors that come into play while determining the interest rate of mortgage loans, and knowing about these can be quite helpful.
Here are the top 4 ways that can help one successfully negotiate for a lower interest rate from the lenders.
Top 4 ways to negotiate mortgage rates
Here are the four effective ways in which a borrower can negotiate with the lender for lower interest rates:
- Focus on improving credit score
A borrower’s credit history plays a significant role in determining the interest rates against a mortgage loan. Lenders provide attractive offers and low-interest rates for borrowers with higher credit scores.
Individuals need to maintain a timely payment history and clear existing debts for a higher CIBIL score. A credit score of 750 or more is considered eligible for hassle-free loan approvals and offers.
- Conduct negotiation with the lender
Though every financial institution offers a particular interest rate on mortgage loans, borrowers can negotiate for a better deal. However, not every individual is eligible for this negotiation; only borrowers with high credit scores and strong profiles can opt for it. Lenders can accept the negotiation and offer discounts if the responsible borrower has a good repayment history.
Moreover, many financial institutions also provide various pre-approved offers for eligible candidates. Such offers can help streamline the application process and are available on many financial products. One can check pre-approved offers by entering his/her name and contact details.
- Go for a higher down payment amount
Paying an increased down payment can easily help in reducing mortgage loan interest liability. The LTV or the Loan-to-Value ratio on a mortgage loan can range anywhere between 75 to 90% of the property’s value. So, a higher down payment will effectively reduce EMI outgo significantly.
- Compare multiple lenders
Comparing the interest rates with multiple lenders can help borrowers in saving more. Thus, individuals need to conduct proper research before selecting a particular financial institution.
Checking a home mortgage loan emi calculator can provide a better idea about loan affordability. Borrowers can compare and select the right option.
Points to check while applying for a mortgage loan
Here are some key points that one should check before applying for a mortgage loan:
- Interest rate
The applicable interest rate is another major point to note. The rate of interest will decide one’s total outstanding loan amount, it is crucial to get a competitive rate.
So, prospective borrowers need to conduct thorough research to find a suitable lender with appropriate interest rates.
- Eligibility criteria and documentation
Every lender sets the criteria benchmarks for assessing one’s creditworthiness, and then they decide if they want to extend credit or not. One should note that these criteria are very lender-specific and hence should carefully check the criteria and the documents before applying.
So, borrowers should know the eligibility criteria to apply for a mortgage loan for assured approval.
- Associated charges
The associated charges of a mortgage loan are another major point. This includes legal fees, processing charges, prepayment and foreclosure fees, etc. If one does not factor in these costs, then it can increase the overall loan expenses.
- Loan terms and conditions
One should make sure that the terms and conditions of a loan are carefully studied. Being aware of these can help applicants to avoid unpleasant surprises or any other complications.
The other important factors that one has to check before applying for a mortgage loan are the LTV ratio that is provided by the lender and the interest rates.
Simple ways to avail of mortgage loan
Borrowers can follow these simple steps to apply for a mortgage loan:
Step 1: Compare the interest rates and select a suitable lender
Step 2: Fill up the application form on the lender’s official website
Step 3: Submit all the documents required to avail a loan against property
Step 4: The representative will visit for property verification.
Once verified, the sanctioned amount will be transferred to the borrower’s account.
So among various other factors, borrowers should keep a check on their credit history before opting for a lower interest rate negotiation. With these 4 ways, one can easily negotiate for lower mortgage loan interest rates.