When purchasing a home one of the most overlooked aspects is getting a good mortgage. The difference between a good and bad interest rate could save a person hundreds of Rands per month or give them tens of thousands of Rands of extra affordability. With interest rates near all time lows, now is an excellent time to lock in “Fix” a low interest rate through either a new mortgage or a mortgage refinance. However, due to the recent rates of mortgage defaults, many mortgage lenders are hesitant to give out new mortgages and getting the best rates are even harder to come by. Luckily, there are various steps a person can take to get a good mortgage rate.

Have Good Credit

The first step a person can take to get a good mortgage rate would be to have good credit. When reviewing a credit application, a person’s credit score is one of the largest factors that a bank uses in the mortgage approval process. This is because a credit score shows a person’s ability to make payment on time and as agreed and can be used to determine whether the person will continue to make payments on time in the future.

To understand your credit, it is important to check your credit report. If there are inaccurate or negative information on your credit report, it is important to fix the issues a few months prior to applying for the mortgage. Some of the easiest ways to improve your credit score quickly would be to have erroneous information removed, pay off any outstanding credit card balances, and pay off any existing charged off accounts. In general, you will need a credit score of 700 to be approved for a mortgage and a score of 740 to get the best rates available.

Put More Money Down

The second step a person can take to get the best possible mortgage rate would be to put more money down. In recent years, many lenders were willing to give mortgages to people with no down payment. Due to declining property values and high rates of underwater mortgages, most banks now require a higher down payment. In order to get approved for a new mortgage or a mortgage refinance you will need at least a 10% down payment. However, in order to get the best possible rate, and to avoid paying private mortgage insurance, you will need at least a 20% down payment.

Purchase a Cheaper Home

The third step that a person can take to get a lower mortgage interest rate would be to purchase a cheaper home. Home affordability is one of the biggest risk factors considered by mortgage lenders. In years past, mortgage lenders were willing to give a mortgage to someone whose housing debt to monthly gross income percentage was 40% or less. Since lenders have found that people with that level of housing debt are more likely to default, many lenders now recommend a percentage of 30% or less. Therefore, if you are looking to get a mortgage, purchasing a cheaper home will lead to lower payments and, therefore, a lower debt rate.

Negotiate

The fourth step that a person can take to get a lower mortgage rate would be to negotiate with lenders. If you have a good credit score, a large down payment, and are purchasing an affordable home, many mortgage lenders will want your business. If this is the case for you, you will be able to negotiate with lenders to receive both a lower interest rate and lower fees.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

Buying Your First Home

However, this doesn’t mean you need get stressed out and overwhelmed by the home buying (and selling!) process.

With some careful planning, patience and expert help from your Mortgage Plus broker, you will hopefully breeze through the process and be relaxing in your new home in next to no time.

Home loans, mortgages and finance.

Unless you have the good fortune to win lotto or be enormously wealthy, it is likely you will need the help of a lender or bank to borrow enough money to buy your dream home.

So – the most important step in preparing to buy your first home is to begin the process of organising the best finance for your needs and lifestyle. Your Mortgage Plus broker is as expert in identifying which of the of loans and options are best suited to you. This home loan calculator will give you a good estimation on how much you can borrow.

And it can definitely pay to use a mortgage broker to help with your loan. As the number of mortgage providers, lenders and banks in the market increases, so does the competition for your business. A mortgage broker is armed with all the latest mortgage information and offers and can quickly identify the best loan for you.

This could save you thousands in the long term and literally reduce the term of your loan by years.

Speak with one of our friendly mortgage brokers today.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za