A reader asks me: “Is it true that if I have worked at the same bank for 25 years and receives my paycheck every two weeks, it will help me negotiate my renewal?” »
“No, not at all,” answers Emmanuel Elkouby, mortgage broker, without hesitation. The bank makes a customer a mortgage extension offer based solely on credit analysis and repayment ability. She won’t take anything like that into account. »
Can we really negotiate a price?
A quick look at the websites of financial institutions tells us what the current interest rates are. One observation: They are very similar to each other. In this case, if you receive a renewal offer from your financial institution, is it worth shopping around at other institutions in the hope of finding a better interest rate? Isn’t that a waste of time?
The process is not useless. For example, if you find a lower interest rate of just 0.5% (7.0% vs. 7.5%) on a $300,000 mortgage amortized over 25 years, you’ll save over a 5-year term $7,284. It’s worth it, right?
How to negotiate
You need to take your steps in advance. Above all, don’t wait until the last minute. Ideally, you should take action three months before your loan expires or as soon as you receive a renewal offer from your financial institution. You must first strengthen your credit file by gathering the relevant documents.
- Proof of employment income
- List of assets indicating their value
- List of loans with balance
- List of credit cards with balances
- Car loan balance
- Other commitments
- credit rating
About creditworthiness
Did you know that every time a lender or provider visits a credit reporting agency to inquire about your credit score, they lose 3 points? Examples: You apply for a new credit card or you buy furniture and are offered to pay in 12 interest-free installments, etc. Each of these consultations results in a reduction of several points. Avoid multiple applications for a loan application.
Diploma
Also, how your employer pays your salary, whether through direct deposit or otherwise, does not affect whether you get your mortgage. Your analysis will essentially be based on your ability to repay the loan. They want to know what type of work you do, what your income is and what obligations you have.
And it’s worth shopping, you don’t waste time. On the contrary, you have everything to gain. Remember that there is competition between financial institutions. Some offer incentives to attract new customers, such as: E.g. cashback, notary fees possibly covered by the financial institution, etc. To do this, they must have your file on hand in order to carry out an analysis. It is in your interest to get to know her.