Comment négocier son hypothèque pour économiser plusieurs milliers de dollars?June 15, 2016

How to negotiate a mortgage and save thousands of dollars?

When the time comes to take out a mortgage, many people are tempted to turn to the institution offering the lowest interest rate. However, the interest rate, as low as it may be, is not cast in stone. So, how to negotiate? Would a fixed rate be better than a variable rate? What are the risks? The penalties? As you can see, there are many questions to answer. Keep these tips in mind during your next negotiations!

Two Principles to Keep in Mind: Never Accept the First Offer and Shop Around for Your Loan

First, whether you're dealing with a bank or a mortgage broker, remember that you should never accept the first offer. Indeed, while the posted rate is the institution's official rate, it can be negotiable (allowing you to get a discount of 1% and even 1.25%). So do not accept the first offer, at the risk of missing out on a much more advantageous loan that, ultimately, can save you thousands of dollars.

Second, it is to your advantage to shop around for your mortgage and check with a number of institutions. A meeting with a broker or even a visit to the websites of the different institutions will give you a better idea of the rates currently available to you. Remember that market conditions are always changing and they can affect the rates shown. Unfortunately, the fact that your sister was able to get a great rate at the bank last fall does not mean that the situation will be the same for you now.

How to Negotiate and What Is Negotiable?

As a general rule, if you don't like negotiating, we strongly recommend that you use the services of a mortgage broker. And remember that everything is negotiable:

  • The amortization period: the longer the period, the more interest you will pay. However, your monthly payments will be lower.
  • Payment frequency: by paying every week or every two weeks, you will repay the loan more quickly.
  • The loan type and term: an open loan will have a higher interest rate, but you can repay it at any time, while a closed loan has a lower rate that may be fixed or variable or a certain period ( 6 months, 1 year, 3 years, etc.). The term is the period during which your mortgage will remain in force at the agreed rate.
  • The interest rate: always negotiate your interest rate!

Sound and Tangible Arguments to Help You Negotiate Better

Finally, the best arguments for negotiating your mortgage are found in your financial situation. Your leeway is mainly a function of your income, your investments, the quality of your credit rating, your debts, etc. The better your situation, the greater your chances of getting a more favourable interest rate.

We urge you to know your credit rating (a value between 300 and 900), which may be helpful during negotiations. This will have a direct influence on your ability to borrow, as it tells the banks and lending institutions that you are creditworthy.

To better negotiate your loan and see what options are available to you, talk to your bank or your mortgage broker today.

Share this article