3 Tips For Negotiating Low Mortgage Rates With Bankers

| June 18, 2012

Buying a property is not something you do everyday. In fact, most people only buy a home once or twice in their lifetime. This means that there is really no incentive at all to track mortgage rates everyday to keep up to date to the latest trends and interest rates movements. So when you do finally make your property purchase, you have to quickly scramble for the latest mortgage rates information so that you have timely material information to make that big decision in choosing a loan. This urgency is amplified when you take into consider that you will have a specified period to exercise your option to purchase the property, and you will not exercise that option unless you can find a loan.

The days where a handful of banks dominate a market is over. With the rise of globalization, markets are opening up and you might be surprised to find the sheer number of mortgage options you can qualify for when the time comes for you to buy a house. The tricky part is getting quick credible information and negotiating with banks to give you better rates than those published. All banks essentially sell the same product which is money.

In case you think that banks are big MNCs that will not negotiate with an individual property buyer like you, you are not exactly right. When you go to a bank to apply for mortgages, you are actually going up against of an individual banker instead of the whole bank. That is the person standing between you are rates lower than those officially published by the financial institution. How successful you are in getting one over the particular banker will then depend on your negotiation skills.

How are you going to negotiate with a banker that handles mortgage loans everyday? Here are 3 tips to keep in mind.

  1. Sales target. Remember that bankers are on a payroll and they have to deliver monthly sales quotas to avoid a tongue lashing from the boss or even a negative appraisal from Human Resource. So when the end of the month is nearing, they get tensed if they have yet to meet their monthly target. Their key performance indicators might consist of selling higher quantum of loans or selling higher interest rates. This really depends from bank to bank. But if you are to drag your mortgage towards the end of the month, banker might be willing to slash their rates in an effort to close your case and clock the sales within that month’s sales quota.
  2. Mortgage comparisons. They biggest mistake any property buyer can make is to only apply for a loan with 1 bank. These usually happens when you trust your property agent so much that their referral is accepted without even looking at what is available in the market. Property agents are not experts in mortgage rates. If they claim to be, they must be performing badly in selling properties to have time to track the loan market. Go to a few banks and always subtly let your banker know that you are looking around and negotiating for interest rates with other banks, preferably their biggest competitors. This keeps them on their toes and they may realize that they have to give very low rates to secure your business.
  3. Talk to another banker from the same bank. The biggest competition of bankers are not bankers from other banks but in fact from bankers within the same bank. You can be shocked at how different 2 different bankers from the same bank can quote you 2 very different rates.

As mortgages can stretch 20 to 30 years, choosing one can very well be a million dollar decision to you. Keep the above tips in mind when negotiating with bankers on interest rates. Or if you want professionals who negotiate for mortgage rates everyday to help you, look for help by engaging mortgage brokers.

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Category: Home Loan

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