| How to Secure Your Lowest Home Loan Interest Rate

Everybody would like a lower interest rate.  It can make a huge difference and save you many thousands that you pay over the life of your mortgage. 

If you use it to your advantage, you can also save a number of years of paying off your mortgage.

Everybody would like a lower interest rate.  It can make a huge difference and save you many thousands that you pay over the life of your mortgage. 

If you use it to your advantage, you can also save a number of years of paying off your mortgage.  So it is a good idea to check you have secured the lowest home loan rate you can, and continue to check, as rates are always moving.

Research is Your Best Friend
You need to do substantial research to find the right loan, options and interest rate for you.  You can troll through all the lenders individual websites,  use an online home loan platform, or ask a professional Mortgage Broker to help you.  A good Mortgage Broker will be able save you a lot of stress, wasted time and money.  They will often know how to access mortgage products that you will not easily find by yourself.

Make sure you take “comparison rates” into account when looking at various rates.   Comparison rates include any other fees you may be charged for the loan – meaning that comparison rates are a far more accurate guide to what you will actually be paying.

Advertised rates are often not the lowest available.  Often lenders will negotiate lower rates than publicly advertised. Don’t be afraid to ask for a better rate.  Business is cutthroat in the lending industry, and many lenders will go the extra mile to secure new business or keep you from switching – If they don’t, go to one who will.

New Customers often get Better Rates
Lenders are always marketing to secure more customers, so regularly offer new customers the lowest rate (so much for loyalty).   You should call your lender, mention you are considering switching lenders for a better rate, and ask how they can better help you.  Regularly they will help you with a lower rate to keep your business.

Your Negotiating Power
Your assets that will strengthen your negotiating power with lenders (including your current lender) include:

• Clean credit file
• History of credit worthiness
• Savings history
• Employment stability
• Your previous/current mortgage repayment history

Make Sure Your Credit File is Clean
A bad credit history is the most common thing that will stand between you and a better interest rate.  If you have blemishes or defaults, lenders will see you as higher risk and thus charge a higher rate of interest to cover the potential risk of you defaulting.

Order a copy of your credit report to check and track any changes to it.  Make sure you pay your bills on time and resolve any outstanding debts.

Having no credit history is nearly as bad as a bad credit history.  It is important to have a credit history even if you don’t need to borrow the money (for example a car).   Show a credit history shows you are capable of making on-time payments.

Reduce Your Home Loan to Value Ratio
If you are applying for a new loan, the larger your deposit the better your chances for a lower interest rate. Best to be above 20% to help avoid Lenders Mortgage Insurance.

If you are refinancing or negotiating a better rate on your current loan, it is important to be able to show that you have substantial equity in your home and therefore having a Loan to Value Ratio of less than 80%.  This may require you to get a bank valuation so that you can prove the value of your property in relation to the amount of your loan.

Getting a better interest rate is related to the level of risk you are as a borrower and how well you can negotiate with the assets you have.  A good Mortgage Broker will be a great help to you in securing a better interest rate.