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Hi all,
How does one go about bargaining for cheaper mortgages? Any tips or tricks on how to bargain?
How do you get the cheapest and best mortgage rate?
Hi there,
Many Swiss lenders are prepared to offer interest rates lower than those they advertise. In the best case, you may get interest rates that are 0.5% lower than advertised rates by taking the time to bargain.
Here are a few tips:
Request quotes from multiple lenders. This not only helps you compare offers, but you can also use competing offers as bargaining chips when applying for a mortgage at your preferred lending institution. You can get an overview of current advertised interest rates in the interactive mortgage comparison on moneyland.ch.
One way to radically reduce interest rates is to make a larger down payment and cover less of the cost of a property using a mortgage. A lower loan-to-value ratio poses less risk for the lender.
As a basic rule: The less of your income goes to servicing your mortgage, the more attractive you are as a mortgage customer. If your mortgage affordability rating is exceptionally good, you have more room to bargain for a better interest rate.
If you are married or in a registered relationship and your partner also earns an income, mortgaging a home together will increase your affordability rating and may help you get a better deal.
If you are close to reaching retirement age, you will find it difficult to get a mortgage at a good rate. Those under the age of 55 generally have an easier time getting cheap mortgages. This article on mortgages after retirement provides more information.
The more of a provider's services you use, the more ready they will normally be to lower their standard mortgage rates for you. This is especially true when you use a bank's wealth management services. However, signing up for wealth management services just to get a cheaper mortgage is not a good idea because active wealth management services are often expensive.
You may get a discount on mortgage rates by taking out a life insurance policy. The same principle applies here as applies to wealth managment services: Getting life insurance just to get a discount on your mortgage rates does not make financial sense because the cost of insurance premiums may be higher than mortgage savings.
The higher your down payment, the lower the interest rate you can expect to be able to get. This also holds true for the mortgage amount: The bigger a mortgage you get, the greater your chances of getting a lower interest rate.
The value of the property in question also affects the rate you get. A property in a high-demand area is much easier for the bank to resell if you default on your mortgage. A property that is new and well maintained is easier for the bank to resell than a property in need of renovation. Because good properties mean less risk, banks are often willing to discount interest rates when you mortgage porperties with good market value.
Best regards from Moneyguru
More on this topic:
Interactive mortgage comparison
Mortgage affordability explained
