With interest rates starting to go up, it’s time to renegotiate your mortgage to try to save a few USD or even a lot more.
The art of negotiation
It had to happen. Real estate interest rates have started to rise. And for those who have not yet done so, it is high time to embark on a renegotiation of your mortgage.
The rates remain very low and, for many loans, the game is always worth the effort. Over 10 years, rates are still around 1.1%, 1.3% over 15 years, 1.6% over 20 years and do not exceed 2% over 25 years.
Expect difficult negotiations, however. Few banks accept to reduce the interest rate on an already negotiated loan. You will surely have to make an effort to get a drop other than symbolic. Generally banks appreciate a long-term commitment, such as taking out a home or auto insurance contract, or even life insurance.
But if you see that the negotiation is blocked, do not hesitate to play the competition and to consider a repurchase of credit, even if it is to be assisted by a broker.
Beware of fees
To be sure of making a profitable transaction, you will need to integrate the various costs involved in a credit buyout. Between the prepayment penalties, representing 3% of the principal remaining due, but limited to a maximum of 6 months of interest, the cost of the guarantee on the new loan and the possible handling fees, we generally consider that the rate spread must be at least 0.7%.
The repurchase of credit should only be chosen if you plan to keep your property for several more years, and if the capital remaining due is at least $ 70,000. The more recent your credit, the more advantageous the operation since the first repayments carry the most interest compared to the principal.
For those who have borrowed since 2012, the savings could amount to several tens of thousands of USDand some are already in their second or even third renegotiation.