Jul 14, 2017

The mortgage market keeps increasing its interest rates and people are finding it difficult to take out a mortgage loan. Banks and brokers are reaping the rewards while people watch from the sidelines and have no say in the deal.

However, this is a scene from the past. From 2015 onwards, the mortgage market has changed and it has become slight easier for people to take out mortgage loans. Though the process is long and takes more than two weeks, people can finally take out mortgage loans for home renovations or other personal reasons.

Getting a good mortgage deal that works in your favor depends on a number of factors. These are explained in detail below:

Good Credit Rating

According to FICO, a credit rating of 750 makes a person eligible for a mortgage with less than 3% interest. Thus, people having credit scores lower than this usually have a hard time bargaining for it.

As banks hand out credit score rating sheets to the clients at the end of every year,to qualify for a great mortgage deal, all you need to do is maintain your score. The score depends on three things:

  1. Make on time bill payments or loan payments if you have taken out any

  2. Try not to make huge cash withdrawals from your credit card

  3. Make sure there are no discrepancies in your score

If the rating is good, you have the chance of negotiating and if it is bad, you might get a loan that is 60% of your home’s equity.

Put Down a Large Down Payment

A person having a good credit score usually has to put down a 10% down payment. Try putting a 20% down payment instead. This will increase the chances of the broker agreeing to your said interest rate.

Go for a Fixed Rate Mortgage

A fixed rate mortgage allows you to pay your loan back with a fixed interest rate. However, the catch here is that you must make all the payments on time. A single missed payment will not only destroy your credit rating, it will also give leeway to the broker to add some penalties. If you are convinced that you can make monthly payments, then fixed rate is a great way to save some cash.

Shop Around

Just because one bank gave you a good interest rate does not mean that you grab the deal. Visit other banks or contact your local broker to find out what deals they are offering. The key to a great deal is high loan cash, low interest rate and low monthly payments. This can only be achieved if you follow the above three points. You can check various banks interest rates by going online and comparing them through interest rate calculators.

All in all, finding the best mortgage deal falls on good credit rating. The higher your credit score, the better the deal you will get. Bottom line, do not go for the first deal you come across, do your homework and choose the one that works in your favor.

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