Secure the best mortgage rate by comparing offers from banks, credit unions, and online lenders. Improve credit score for favorable terms. Leverage mortgage brokers for expert guidance and negotiation. Stay informed on market trends, consider rate locks, and negotiate terms, fees, and closing costs for optimal results in homebuying.
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“Looking for advice: My partner and I (mid-20s) have just received an offer on our first home and are looking to purchase another in Christchurch. Hoping to find a house for around $650,000. We will have a deposit of around $200,000. We’re looking around at interest rates, and though we knew they were high, 7% seems to be the best I can find. What’s our best chance of getting a lower rate? Should we wait to purchase when it’s dropped, or should we go through a mortgage broker? How much could a mortgage broker help?”
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Comparing Mortgage Rates: To secure the best mortgage rate, begin by shopping around and comparing rates from various lenders. This can include traditional banks, credit unions, and online lenders. Gathering quotes from multiple sources is essential as rates can differ significantly. Utilise online tools and reach out to local financial institutions to get a sense of the current offerings in your area.
Credit Score Improvement: Lenders often use your credit score to determine the interest rate they offer. To increase your chances of securing a lower rate, work on improving your credit score. This can involve paying down outstanding debts, ensuring that you pay your bills on time, and reviewing your credit report for any errors or discrepancies that need correction. A higher credit score can result in more favourable mortgage terms.
Leveraging Mortgage Brokers: Consider enlisting the services of a mortgage broker. Mortgage brokers have access to a network of lenders and can help you find the most suitable mortgage for your specific situation. They not only assist in rate comparison but also negotiate on your behalf and provide expert guidance, which can be particularly valuable if you’re a first-time homebuyer. Mortgage brokers can often secure better rates and terms than individuals can on their own.
Timing and Negotiation: Stay informed about interest rate market trends. If you come across a rate that you find favourable, you may want to consider locking it in. A rate lock will guarantee your interest rate for a specified period (usually 30-60 days), protecting you from potential rate increases while you complete the home-buying process. Additionally, don’t hesitate to negotiate with lenders. Negotiation can encompass more than just the interest rate; you can also discuss other terms, fees, and closing costs to make the mortgage more advantageous for you. Remember that while you can wait for rates to drop, balancing this decision with your readiness to purchase a new home and your financial situation is crucial.
Hope this helps.
Regards, Clive Fernandes (Financial Adviser)
Director – National Capital
Disclosure: I am the director of National Capital, a KiwiSaver advice firm. The views expressed in this article are the views of the author. The information provided is of a general nature and is not intended to be personalised financial advice. You may seek appropriate financial advice from a Financial Adviser to suit your individual circumstances or contact National Capital.
