It is not always easy to borrow on the best terms. 2018 was a great year for mortgages, thanks, of course, to the continued decline in interest rates. The redesign of tax benefits (the housing bonus) in the three regions did not weigh much on the market. According to a study, the sluggish interest rates on traditional investment products, such as savings accounts and term accounts, have clearly supported residential real estate, which has become relatively more interesting. For 2016, BNP Paribas Fortis, a leader in this field, expects a slight growth in the real estate market, which will continue to carry interest rates still at their lowest. Good news for getting your Residential Mortgage Loans approved!
- Ensure the Quality of your File
The bank will be all the more willing to grant you a favorable rate that your file will be solid. If the quality criteria listed below are met, the usual rate will be reduced by 0.25%. Ask to borrow 90% at most of the value of the home (the “quota”), for a minimum amount of 75,000 euros, in 25 years maximum. Your personal contribution must really be made up of own funds, without coming from an installment loan or a property guarantee that would be added to the mortgage registration. Monthly payments will not exceed 40% of your income.
- Compare all Fees
Almost all candidates compare at least the offers of some banks. Especially since the analysis is generally limited to this, whereas only the total cost of the credit counts. In the case of an average mortgage, additional charges can easily account for around 40 percent of interest charges. If the offer is “bundled”, the highest additional cost item will be the “outstanding balance” insurance policy (in the event of the death of the borrower(s), the insurer would pay the outstanding balance. The existence of a balance-of-pay insurance is usually a compulsory condition for obtaining credit.
- Choose a Fixed Rate
The main difference between the fixed or semi-fixed rate (the rate remains stable throughout the credit period, or at least a significant part of it) on the one hand and the revisable rate every year, every three years or every five years on the other hand, usually resides in its price. Variable rate loans are in principle the most attractive, since the monthly payments are much lower than in the case of a fixed rate formula. But now that rates have reached historically low levels, fixed and semi-fixed rate offers are doing very well. It is much more likely that rates will rise, gradually or abruptly, in the coming years, that they continue to give ground.
Be aware that refinancing is not free: if you choose this solution, you will have to pay the reinstatement fee (three months of interest on the principal remaining due), the costs of the new credit as well as the costs of ‘act, in case of bank change. Modifying the loan or changing the bank is only meaningful if the reduction in monthly payments is greater than the costs. It is fair to say that overall, the new loan rate should be about 0.5% lower to offset the costs, but not yet for you to earn.
For getting more information about different type of mortgages check www.unbeatablemortgages.ca.