Mortgage rates have not finished climbing. However, some solutions exist to try to lower the cost of its financing.
If you are looking for financing to acquire a property, you could not escape the news: mortgage rates are constantly rising, averaging 3.20% over 20 years. Faced with this rapid and uninterrupted rise, all savings are good to make. MoneyVox lists the possibilities.
1 – Play on the personal contribution
Impossible, or almost, to complete a mortgage without bringing at least 10% down to the bank. This amount represents the various costs, in particular of the notary, that must be pay the borrower at the signing of his loan.
In recent months, many credit professionals have put forward an explosion in the amount of personal contribution. Over the last three months of 2022, the average level was thus 43.5% higher than that recorded in the same period of 2019explained the CSA/Crdit Logement quarterly observatory published in January.
Having a better contribution can slightly lower your borrowing rate, confirms Mal Bernier, spokesperson for broker Meilleurtaux. Be careful though, because if increasing your personal contribution can lower your interest rate, this can paradoxically drive up your overall APRas Aristide, one of our regular contributors, points out in this blog post.
Moreover, some banks would now be more sensitive to the residual savings of their future customers than to the amount of the contribution. It is possible to increase its contribution if this can reduce its loan duration for example, and therefore its interest. But there is a calculation to be made, because depending on the banks, it can also be interesting to lower its contribution and offer the bank a residual savings, confirms Ccile Roquelaure, spokesperson for the broker Empruntis. Some banks can in fact today make a discount on the interest rate if you bring back a significant residual savings, it is an important negotiation tool.
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2 – Change borrower insurance
You have no doubt heard of the Loi Lemoine, which reforms borrower insurance for mortgage loans. This is undoubtedly the best way today to earn thousands of euros on your mortgage.
After a first part set up from June 1 for new borrowers, the law of February 28, 2022 for fairer, simpler and more transparent access to the borrower insurance market now applies to all home loans in course since September 1, 2022. It allows, among other things, all borrowers to terminate his contract at any time to choose anotheras long as the latter offers equivalent guarantees.
Find the lowest rate for your real estate project!
Despite this reform, individuals are still strongly encouraged to take out insurance offered by their bank, proof of their control over the signing of the loan. A study by Magnolia.fr, a site specializing in borrower insurance, showed at the end of December 2022 that 80% of its new customers came for a change of contractagainst only 20% to ensure a new loan.
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But once the credit money has been released by the bank, borrowers no longer hesitate to look elsewhere. Logical, when we see that the savings made can reach several thousand euros.
According to Magnolia.fr, they can thus rise to nearly 18,000 euros, for example, for a couple of 43-year-old executives who still have to repay a capital of 216,667 euros over 18 years.
Save on your loan insurance
3 – Think about multi-line loans
The multiline loan can be a very good solution for optimizing its financing, according to Ccile Roquelaure: It allows to play on two lines of loan, or even three in some cases. The goal is to lighten your credit a little compared to a single line of loan because the shorter the credit, the lower the rate. This will make it possible to lower the interest on part of the financing.
Real estate credit: the multiline loan, a solution to pay less for your credit?
You still need to have the financial capacity to repay a larger monthly payment over the first years of your credit. And that the establishment with which you finance your credit offers this solution. However, the banks that made a lot of it at one time are not the ones who pretend at the momentjudge on his side Mal Bernier.
4 – Negotiate the smallest detail
The various experts interviewed agree on one point: the borrower must negotiate all he can to try to lower the bill. The customer can for example ask the question of the type of guarantee, explains Ccile Roquelaure. The decision is not in his hands, but the different types of loan guarantees do not cost the same thing and sometimes the bank can agree to play on it to lower the cost.
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You have to arrive with the capacity to negotiate and prepare your arguments, confirms Mal Bernier, for whom savings can also be made on ancillary products sold by the bank at the same time as the credit: If you need to open an account to direct your income, do not hesitate to negotiate so that the bank card is not payable. This kind of gesture does not cost the bank very much, but for the customers it still represents a saving every year. All equipment, which may seem incidental, must be negotiated. This is the case, for example, if you also take out home insurance with the bank.
Find the best rate for your real estate project