March 6, 2019 Adrienne Cantwell 0Comment

 

When renegotiating the rate of a mortgage, the borrower must be vigilant about the increase in ancillary costs that can offset the loss resulting from a reduction in the rate. These fees can come in different forms such as insurance, fees or management fees.

Reduce the cost of your mortgage

Reduce the cost of your mortgage

Renegotiating the terms of repayment of one’s home loan reduces the cost of financing, especially when the borrower successfully negotiates the interest rate on the loan. However, some banks will seek to compensate for this loss by increasing certain ancillary costs such as borrower insurance or handling fees. This is why the borrower must be particularly vigilant vis-à-vis the fees he pays in addition to the monthly payments of his mortgage. However, this situation does not affect all credit institutions. Some will even invite borrowers to renegotiate to offer other banking products such as insurance or savings.

Solutions in case of increased fees

Solutions in case of increased fees

In the event that the bank has indeed increased some of its ancillary costs, the borrower has the right to seek a competing offer with more benefits than his current offer. More specifically, the cost of financing may be lower for a competitor with a lower interest rate for real estate loans and few additional costs. As a result, it is also possible that the current bank of the borrower aligns with the rates of the competing bid so as not to lose the customer and the products attached to it. However, this maneuver is feasible only in the case where the borrower finds a competing offer more interesting. If not, the latter may use a credit consolidation operation to review its repayment terms. With this operation, the borrower will have the opportunity to benefit from a new interest rate for his mortgage while adapting the terms of repayment to his real abilities. Thus, the borrower can reduce its monthly payment and possibly the cost of its financing, in return for an extension of the repayment period.