In this life, everything can be negotiated, even the terms of your mortgage. Knowing how to do it can make the difference between a good loan or a mortgage burden that will stay with you for much of your life.
Want to be one of those who get the first? Here are the keys to negotiating your mortgage terms before signing.
Have the documentation ready
If you want to negotiate strongly, you need to demonstrate solvency from the outset. To do so, it's essential to prepare all the necessary documentation before going to the bank. This includes:
- Your most recent pay stubs or tax returns if you are self-employed.
- Proof of other income, if you have it.
- Recent bank statements.
- Employment history report.
- List of other current loans or debts.
The more confidence you provide the financial institution in your solvency, the better conditions you can negotiate.
Submit a report with your income for the past 24 months (preferably accompanied by pay stubs and tax returns to support it), your savings rate and monthly expenses, as well as any financial assets you own. Banks highly value savings and responsible financial management.
If you can demonstrate that you know how to manage your money, it will be easier to negotiate favorable terms.
Be clear about your value as a customer
Not all clients are the same. If you have a good financial profile (steady income, low debt, a good credit history, and previous savings), you'll be an attractive client. And if the bank wants you as a client, you'll be able to negotiate better terms.
Remember that banks are looking to reduce risk. If you demonstrate financial stability or manage to improve your credit profile , you may be able to obtain lower interest rates or negotiate certain fees.
Compare the APR before choosing
To get the best mortgage, it's key to compare several lenders. And not just the interest rate, but also the APR (Annual Percentage Rate), which includes fees, insurance, and other associated costs.
Don't forget that the APR is the most accurate way to compare the true cost of a mortgage loan. It includes all the fees associated with the mortgage, giving you a clearer idea of the total cost of the loan.
Don't just look at the nominal interest rate, as the NIR only reflects the costs associated with repaying the money in the form of interest. The APR is much more accurate, as it shows what you'll actually pay over time.
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Write down the commissions you are interested in negotiating
Some fees can be a significant expense in your mortgage. The main ones to negotiate are:
- Origination fee: Some lenders waive this fee, but at UCI, it's included in all mortgages. Knowing this fee in advance will help you better calculate the total cost.
- Early repayment fee: If you plan to repay part of your loan early, try to reduce or eliminate this fee.
- Subrogation or change of terms fee: Negotiating its elimination can give you more flexibility in the future.
- Cancellation fee: This fee also applies to UCIs, so it's important to keep it in mind from the start.
Do the math with the bonus products and negotiate
Institutions often offer mortgages with reduced interest rates in exchange for additional products. However, these products can make the mortgage more expensive in the long run. Some key aspects to consider when negotiating your mortgage before signing:
- Life insurance: Many mortgages include bonuses if you purchase life insurance with your mortgage . But what's the real cost? If the mortgage is for 30 years and you're now 35, the cost of insurance will skyrocket when you're over 50. Calculate the long-term impact.
- Alarms: Some banks offer rewards for installing an alarm system. Think ahead: if you decide to cancel your alarm or move, your interest rate could increase.
- Other subsidized products: Remember that many of the terms will be tied to you for the entire life of the loan. If you decide to change lenders later, you may face penalties.
A key tip: do your calculations without subsidized products. This will give you a clearer idea of the true cost of the mortgage without relying on additional products.
Remember that there are mortgages without any ties , which will make calculating them much easier. Before accepting any ties, compare the costs if you purchase these products separately from other lenders.
Be aware of abusive clauses or clauses that you do not understand.
It's essential to carefully read all the terms of the contract. Some clauses can significantly affect the long-term mortgage. If anything isn't clear, ask your bank or consult an expert.
Always request the FEIN (European Standard Information Sheet) . This document contains all the mortgage terms and conditions and allows you to review them before signing. If something doesn't add up, negotiate or look for another option.
Be clear about the wars you want to win
Not all battles are equally important. When negotiating a mortgage before signing, there are aspects you can choose, such as the notary and appraiser. However, some of these options are not as relevant in practice, and you could compromise on them if it allows you to obtain better terms on more critical aspects.
For example, if the bank prefers to use its appraiser and, in return, you can negotiate a better interest rate or a lower early repayment fee, this could be a more valuable strategy for you in the long run. Sometimes, accepting seemingly minor conditions can make it easier to get a cheaper mortgage.
It's important for you to know that the law protects you regarding what you can and cannot accept from the financial institution.
No entity can force you to purchase additional products, use its appraiser, or sign with its notary.
These are your rights, and you should stand firm if the lender tries to force you to do so. If any clause seems confusing or excessive, you may want to consult with a lawyer or mortgage expert before making a decision.
The important thing is to prioritize what truly impacts your finances: Are you interested in the ability to repay the loan without penalties? Or would you prefer a low fixed rate at the cost of accepting additional products that tie you to the bank? Be clear about what's best for you in the long term and don't hesitate to negotiate these key points.
Conclusion: Negotiate well today to save tomorrow
Before signing a mortgage, it's crucial to review each condition and understand how the terms, fees, and additional products will affect your loan. While attractive bonus offers may seem convenient, it's important to evaluate their long-term impact.
By negotiating the terms of your mortgage before signing, you can save thousands of euros and get a mortgage that truly fits your needs.
