While there are a few ways to buy a home without getting a mortgage, you should only consider those routes if you don’t qualify for one. Even if you have the money to buy a house outright, in the long run it could be a much better investment to get a mortgage anyway and free up 80% of that money for other ventures. But we’re not here to discuss that, we’re here to explore ways to secure the lowest rate possible on that mortgage.
Great Rates Come From Great Lenders
Needless to say, the best rates lie with the best lenders, but how can you find what you are looking for? Compare mortgages with Habito, a free online mortgage broker, to find the best deals. But beyond a simple deal comparison, you’ll want to get a feel for the lender. Shop around and ask questions. Research things like lock periods, over payments and closing costs and think about how these could affect your decision.
Check with friends and family about their experiences to see how customers have been treated and how they have fared with their mortgage from each company. You can also get a feel for this from your initial interactions with the company. With a little research you’ll find a company with not only great rates, but who will look after you, too.
Enhance Your Down Payment
By finding a way to make a larger down payment, not only will you have to borrow less, but you can score a lower mortgage rate and payback less interest on what you do have borrow. This may mean scrimping a little more before buying your house, or you can pull money from somewhere else.
Dipping into other pots of money to reduce your overall spending on your house could prove worthwhile if it and allows you to replenish those savings (and some) in the long run. You could also borrow money from close friends and family with low to non-existent interest rates.
Work on your credit score
Everyone knows that your credit score has a huge effect on your mortgage rates and your ability to get a mortgage at all. Adding as little as one point could put you in a different tier and save you loads, but how do you improve your score? Here are a few tips from Forbes to help you do just that.
Consider a different type of mortgage
While 30-year fixed rate mortgages are very common, you have a whole lot of other options, so explore them. The certainty of a fixed rate loan is very appealing to some, but while you may benefit from protection against increased interest rates, you also won’t prosper from potential plunges.
Adjustable rate mortgages can work well if you only intend to keep your mortgage for a few years, allowing you to benefit from a cool low rate for a set period of time, but after that set period, your rate is down to fate which is hard to plan for and puts most people off.
You can also choose a shorter overall term for you mortgage meaning you have to pay bigger chunks at a time, but you’ll pay it off faster, and pay less in interest overall. Larger payments may seem daunting, but if you can change your lifestyle to accommodate this and close faster, it will all pay off.