That’s it, you’re ready to set foot in the real estate market. Before spending many hours on Centris and other sales sites, it is better to think about your mortgage. How to get the product that will really suit your needs? Here are five commandments for successful negotiation.
do you get ahead
Mortgage Broker Nicolas Ouimet and BMO Financial Group Vice-President, Mortgage Specialists Jean-Michel Klinkow agree: the first thing you need to do to successfully negotiate your first mortgage is to plan ahead . “There is a lot of volatility in the market right now. By taking it in advance, we guarantee our loan for the months to come”, underlines Nicolas Ouimet. By getting a mortgage prequalification, your rate and the terms of your loan will be secured for the next four to six months, protecting you from another potential interest rate hike.
Shop and compare
Don’t just go to your current financial institution to get your mortgage, because another institution may offer a product that better suits your needs. Nicolas Ouimet suggests taking a sample of at least two or three banks… or doing business with a broker, whose role is to do this work for you. “I preach for my parish, but as a mortgage broker, I have access to most major banks and I have access to all my virtual lenders. With my clients, you can really get an overview,” he says. For his part, Mr. Klinkow says that a customer’s loyalty to his bank can be rewarded.
Don’t just think about the interest rate
Of course, the interest rate is an important consideration when negotiating your first mortgage. However, even if you have an impeccable credit score, you will not be able to negotiate it down significantly. ” There is no miracle. All lenders have roughly the same rates at plus or minus 0.1%,” says Mr. Ouimet. So remember to look at the other aspects of your loan, including the term. Is the traditional and popular five-year fixed rate for you? Mr. Klinkow points out that “more than half of the mortgages do not go to term”. It can be expensive. Take the time to analyze your current and future needs in order to find the term that really suits you.
Do not neglect the characteristics of the loan
A mortgage is more than a rate and a term. Several characteristics come to modify the parameters. Among these: the option of early repayment, access to accumulated money if needed, the possibility of adding a person or transferring the mortgage, penalties in the event of non-payment, etc. All these points must be taken into consideration during the negotiation. “Some virtual banks may have tempting offers, but if you miss a payment, you can have very severe penalties,” says Jean-Michel Klinkow.
Follow promotions
Cash back, payment of notary fees… At this time of year, most major financial institutions are in seduction mode and offer various promotions around mortgage loans. Do not hesitate to ask questions about the promotion offered, particularly with regard to its reimbursement in the event that you “break” your mortgage before term. “In general, the promotion of a cashback, if it really has no connection with your interest rate, it is a good offer”, specifies Nicolas Ouimet.