How To Get The Best Deal On Your Mortgage

As anyone who has ever owned a home will tell you, mortgages can be expensive. Currently, mortgage rates on many 30-year fixed mortgages are between 6% and 6.2%, meaning that interest payments are higher than they’ve been since the financial crisis. The market base rate is what ultimately sets the interest rate that you pay on your property. While central banks have been lowering this recently, there is a chance that it could go back up if inflation becomes a problem. Fortunately, there are some proven strategies you can use to get a better deal on your mortgage. Here’s what we recommend. 

Shop around for multiple lenders

The most obvious strategy is to shop around and take a look at multiple lenders to see what rates they are offering. While most mortgages are between 6% and 6.2% right now, you could find a bank, credit union, or online lender that is willing to go a bit cheaper. Furthermore, you can also look at the total cost of the mortgage over time. While the interest rate on one mortgage product might be higher, it may also have lower entry fees or may not require any set up fees at all. 

If you go to a broker like Everest Mortgages, you can get them to go through this process for you. They can take a look at all of the mortgages on the market and tell you which options are best for you. 

Improve your credit score

The next thing you’ll want to do is improve your credit score. If you can get this into the excellent range, then it will lower the amount of interest you have to pay on your mortgage. It’s a good idea to pay down your debt first and then fix errors on your credit report. Even something as simple as being registered to vote can have an impact, because it tells credit rating bureaus that you have a fixed location. 

Lower your debt-to-income ratio

Another thing you’ll want to do is lower your debt-to-income ratio. You’ll want to keep this between 36% and 43% of gross income, if possible, or ideally in the 25% to 30% range. This tells lenders that you’re able to take on credit and pay it back while at the same time not using so much that you undermine your finances. 

Make larger down payments

You could also look into making a large down payment on a property. If you increase the down payment amount, it actually reduces the amount of interest that banks charge you on your mortgage. That’s because you have more equity in the home to start, and they’re facing a lower risk. It also reduces the principal size of the mortgage, so you pay less overall anyway. 

Explore rate buy downs

Finally, you could look at rate buy-downs. The idea here is that new construction or certain programs include builder concessions at lower rates. You’ll need to negotiate these individually and seek them out with new build construction companies. 

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