Negociating loan rates

Below the important elements to consider when negociating your loan rates:

 

What is the loan amount ?

 

Every mortgage provider expects to close a certain annual mortgage volume. If the loan you request is CHF 10 mio for exemple, the incentive to provide you with the best rate possible will be greater than if you request a CHF 200k loan.

 

What is the « loan to property» ratio ?

 

This ratio equals the amount of the requested loan to the property value. A mortgage provider considers a CHF 1 mio loan on a CHF 5 mio property less risky than a CHF 1 mio loan on a CHF 1.3 mio property value. Less risk = better rates, potentially.

 

What is the « income to mortgage » ratio ?

 

Mortgage providers will also evaluate the risk of your request based on the ratio between your annual gross income and the amount of the needed loan. The better the ratio, the better the rate potentially.

 

Will you provide the lender with extra guarantees and/or counterparties ?

 

You may have an important investment portfolio. If you are willing to bring it to the bank financing your request, you might be able to obtain a better rate.

 

Also, by pledging pension fund or 3rd pillar plans to the loan, better rates may be offered to you.

 

What is your global state of affairs ?

 

An assessement of your situation as a whole (assets, income, professional field, etc.) will most likely play a role on the attractiveness of the loan(s) offer(s).

 

 

Once these elements are taken into account, you will give your request the best chances to be accepted with favorable conditions by submitting a well presented file. A thourough explanation of your project, detailling the requested loan, which assets are used as part of the down payment, what is your income/loan ratio, etc, will be appreciated and quickly handled by mortgage provider(s).

 

It will also make sense to compare different offers. Providers financing policies change often. The one offering the best rate for your case in January, wont necessarly be the best by July !

 

Depending on the mortgage volumes generated throughout the year, some mortgage providers will increase or decrease their rate offers.

 

Dont stop after having met with 1 or 2 institutions. This is not sufficient to have an overall view of what the market can offer you.

 

This process will be better done through a (good) mortgage broker (like us ! 😊). We work with all mortgage providers on the daily, and are fully informed on where to bring your request, based on the many factors to consider !

 

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