11 Feb Negotiating your loan
The negotiation period is the time to ask all your questions including:
- How much can I borrow?
- Will I need mortgage insurance?
- What is the minimum monthly payment on your lowest-interest-rate loan?
- Do you have a loan with the features I need?
If you find a suitable loan, the institution should give you a detailed breakdown of the costs – everything form application fees (sometimes refunded) to establishment fees, the cost of any valuations (and who pays), administration charges and early-termination penalties. All proposed fees and charges should be in writing. Make sure you understand them all before signing the agreement. Many institutions may not have much room to move on interest rates but they may negotiate operating fees.
Once you decide on your course of action, ask how much your loan will cost and how long it will take to pay off. Many institutions have computer software presenting loan-progress scenarios based on various repayment schedules. Make sure the projections include fees and charges as well as the total interest to be paid over the life of the loan.
The more research you’ve done on the different mortgage deals available the better. If you know and understand what’s on offer you can negotiate with confidence. Always ask if the institution can make the deal a little better – the worst that can happen is they’ll tell you it’s the best deal they have.
Again, when you compare mortgages consider more than just the interest rate. The right package for your circumstances should help you be debt-free sooner.
You can leverage your existing relationship with the institution. Remind them of your custom. If you need other products, say a business account or credit cards, tell the institution you are willing to bring all your custom to them if the terms are right.
Did you know?
Ask for a sample copy of a mortgage contract. If there are unacceptable clauses then seeing it early will save you from completing an application form for nothing.