The market for mortgages is currently flooding online offers and innovative apps such as Currency. At least that’s how it seems when you look at advertising on TV and online.
In fact, most mortgages are still taken out with traditional banks. Not every new owner of a property is a bed of roses and can show impeccable finances. With more complex projects, upcoming renovations and other things, you will reach your limits with an app. And even in old age, as a mortgage borrower, you have to hope for goodwill from the financial institution. None of these circles are initially potential customers for standardized offers and mortgage apps. Personal negotiation and conviction are still necessary there. Your own qualities must be presented positively.
All that remains is the conversation and negotiation with your own house bank and maybe with two or three competitors. But what does it matter? The bank employee has a huge knowledge and experience advantage.
Shahram Shad from Moneypark did in an article in the Aargauer Zeitung revealed some secrets, which I want to summarize here in excerpts.
- In principle, the risk surcharge and the bank’s profit margin are negotiable, even if this is perhaps not exactly what you will call it in the conversation.
- A good argument is a high equity ratio. If you have more than 35% personal contribution, you can expect an interest discount of up to 0.15 percentage points.
But as a new buyer there is often still a lack of personal contribution. - If the calculated load results in an affordability of less than 25%, a further 0.05 to 0.1 percentage points are discounted. Any common one helps to provide an overview Portability calculator. If the requested bank calculates a little less favorably, you have to negotiate hard and stay on the ball!
- High mortgages are popular with banks. With a mortgage volume of over a million you can get away 0.05 percentage points cheaper. Other business relationships that can be brought in are also popular for the bank. Unfortunately, those willing to change are often in a better position for negotiations, as their own house bank has already taken over the business.
- At the end of the negotiation, if possible, do not let yourself be pushed, but wait for a written offer and compare. And yes, not letting this push you is often difficult. At least in the case of own homes, the market is quite tight and you have to make a quick decision, otherwise someone else will get a chance on good properties.
Thanks to Mr. Shad for his insightful article.
The stock market expert has another building block for the negotiation Francois Bloch, also writing for the Aargauer Zeitung, contributed. He pointed out that for fixed-rate mortgages, the yield curve from five to ten year mortgages is not always linear, but rather shows a jump at the transition from nine to ten years. This has to do with the fact that customers often want even numbers for the term and do not look closely at the intermediate values. If the term is not so important, it can be cheaper to take out nine instead of ten years.
Many thanks also to Mr. Bloch for this observation, which I noticed a few years ago with my own mortgage and consequently opted for a nine-year fixed-rate mortgage.
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