How to Secure the Best Interest Rate
6 March 2023 – REAL ESTATE, PROPERTY OWNERS & BUYING TIPS
With interest rates on the rise, people looking to purchase property and existing mortgage holders looking to refinance will be eager to flesh out the best rates possible.
Here are our tips to help you negotiate the best rates from the current finance market:
1. Shop around. You need to be prepared to consider all the options available.
2. If you are not going to use a mortgage broker to do the work for you, you need to become the broker yourself.
3. Know the numbers. You need to get familiar with all the banks and lending institution rates. Get to know what specials are on offer and if you are eligible to take funding from these banks / lenders. A good place to get started is online tools at various banks or interest.co.nz where they compare all the banks and lending institutions on a spreadsheet.
4. Give yourself time to secure a great rate. It’s unrealistic to think that within 7 days, or even a couple of weeks, you can get one bank let alone a number of options for you to negotiate and choose from. The minimum of time you should give yourself is 3-4 months.
5. Get all your info ready. All your income and financials, assets and liabilities register, spreadsheet of outgoings (day to day, month to month, yearly living costs) and package this up ready to send to where you want to apply for finance.
6. Apply to one bank and get a letter of offer.
7. Then apply to another and another until you are confident you have 3 or 5 of the sharpest rates from them.
8. Then negotiate. Leverage is important and knowing who will do what and using that to negotiate another lender or pitch them against each other is free market competition. This is important if you are going to get them to compete for your business. Don’t be loyal to a bank, they generally won’t be loyal to you.
9. Banks love new business. Be prepared to move other loans or all your banking if need be. Where there is more business or opportunity for a bank in securing your business they will generally negotiate further to secure it.
10. Read what economists are saying. Understand why rates are going up and if and when they may go down. Consider when you may be able to pay down lump sums of debt. Then you can structure your rates and the terms. There may be benefits in breaking your lending up into sections. For example, some on longer term rates, medium term rates and some maybe shorter term rates. Look for the special rates and try to use them where you can.
