Banks and smaller lenders want to keep your business, meaning they are likely to match a competitor’s loan terms when presented with competing offers. However, before you decide to negotiate your loan, there are a few things you should consider.
The Lowest Interest Rate
Before you can negotiate, you need to know what the lowest possible loan rate is. There are three simple ways to do this:
- Use a mortgage broker. They know all the rates offered by different lenders.
- Check the websites of possible lenders. The rates listed are usually the best rates reserved for new borrowers.
- Contact the bank directly. If you ask for their best pricing while enquiring about applying for a large loan, they will most likely provide you with the best rates they have available.
What makes a loan attractive to banks?
Banks will find some types of loans more attractive than others. Attractive, low-risk loans are more likely to receive lower interest rates.
- Larger loans typically have lower rates.
- If you borrow less than 80% of the property’s value, most lenders will provide you with a better rate.
- Home loans receive better terms than investment loans.
- New customers receive the best rates possible.
Your borrowing history
If you are a new borrower, you have an advantage. You have probably done your research and have compared different lenders and their loan terms. If so, you can show your preferred lender or current bank these competing offers.
If you are an existing borrower and have shown loyalty to one bank or lender over the years, it may require a little more work to get them to match a better offer. You may have to start the refinance process with another lender to convince your lender to match a rate.
When you try to negotiate a better loan term, working with a mortgage broker can be beneficial. Not only can mortgage brokers provide you with information about competing rates, but they can also submit a pricing request to your current lender on your behalf. This pricing request shows your lender that you are rate shopping and intend to refinance. If you want the best rate possible, Mortgage Street can help. We are a non-bank lender, and our brokers can secure a loan for you that has the best terms. No haggling or competitor matching is necessary.