And here is the continuation of my article How to properly negotiate your mortgage, second and last part. Let’s pick up where we left off…
After this interlude, we finally get to the heart of the matter, rental investment. I then simply put in place what I mentioned in the first paragraph to properly negotiate his mortgage: I showed that I knew my file inside out, I explained my current debt ratio and future, I specified my rest to live. I showed him the interest of my investment project. The bank, which seemed a bit of a novice in this area, was surprised at the gross profitability that I showed it. Having arrived at my current bank through a broker during the purchase of my main residence, I texted them that they will be competing on my file in turn, with a broker therefore. I specify the financing that I wish to obtain:
A few days later, I received a first simulation: 3.25% excluding insurance. Looking at the rates at the time and in my context, I tell myself that this is already not bad; especially for rental, and especially without contribution. For information, according to MeilleurTaux as of the end of March (their last update dated 03/21/2014), here are some examples of good rates in the West:
By comparing with the average rates specified in this article on cBanque dated 02/04/2014, which are average rates therefore logically higher than the good rates presented just above, I really tell myself that this first offer was nice. But let’s continue.
At the same time, I meet my broker and give him the same information. In complete transparency, I tell him in turn that I am also processing the file directly with my bank. A few weeks later, I sign the sales agreement and the active search to really negotiate your credit can begin! After final exchanges with my 2 intermediaries on loan, I am therefore awaiting the first concrete proposals. My bank draws first, with an adjusted rate: 3.05% excluding insurance, nice! Once again, looking at market rates, I clearly tell myself that the bank has hit hard, and that I will continue my adventure with them. Bad point on the other hand, each modulation of my loan will cost me 100€. Second bad news, IRAs are maintained in the event of a takeover by the competition. But they are reduced to 10% in other cases, which is not bad at all.
However, I send these figures to my broker, who confirms that the rate is excellent given my project (as a reminder, rental investment with €0 down payment) and asks me for additional time to see if he is able to send me a better offer . A few days later, my phone rings:
The broker made me an offer at 2.95%, all coupled with an insurance delegation saving me several thousand euros compared to the offer with group insurance from my current bank. If you haven’t already, I invite you to read the article on these economic insurance delegations. He completes his remarks by confirming to me that the IRAs are indeed at 0€. Less good news on the side of the modulations, which are not possible before 15 years, because he tells me of the establishment of nested loans (or nested loans). Concretely, I borrow part of the sum over 15 years and the rest over 20 years, mechanically lowering the overall rate. But I tell myself that with the IRAs at 0€, I will be able to simulate, or almost, the modulation of the monthly payments.
Is the exercise over then? Well no! My bank tells me that it really wants to work with me on this rental investment, so it makes me a counter-offer very similar to that of the broker! Unfortunately for them, it is overall a tad less interesting than that of the broker. She must have sensed my lack of interest in their proposal, since the bank called me back a few hours later to let me know that she was going to work on a new offer. A few days later, new proposal. The spread remains small, but in favor of my current bank this time. In the end, I still opt for the broker. For several reasons :
If I had to summarize in a few words the levers to use to properly negotiate your mortgage, I will simply highlight 2:
What do you think of the figures obtained? Do they look correct to you? For your part, what are your negotiation methods?