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How to Choose A Mortgage Lender?

Your own apartment means comfortable living, stability and confidence in the future. But often it is not possible to save up the entire amount for housing. In this case, you can apply for a mortgage. How do I find a mortgage lender that suits me?

Choosing a lender for a mortgage

Three main criteria that borrowers pay attention to when choosing a mortgage lender ease of servicing the loan, the interest rate and the lender’s reliability.

The comfort of servicing loans is a large set of additional services that make the relationship between the borrower and the lender easier and more comfortable for the borrower. These are SMS notifications about the date and amount of payment, the possibility of correspondence with the lender via your personal account or email, making payments and making partial or early repayment via an online lender or call center. Sometimes the human factor also works – the ability to communicate with people, not with gadgets and artificial intelligence. In this case, a person chooses the nearest lender. Some clients choose this option because it is difficult for them to get used to new technologies; others, on the contrary, because they are used to them and have learned to value society and paper documents as opposed to electronic document management.

More than half of borrowers (most often, these are residents of megacities who have a very high rhythm of life and every minute counts) claim that the comfort of servicing loans is no more important than an interest rate, so when choosing a lender, they carefully study the list of online services.

In addition to the online service, potential clients are interested in the opportunity to quickly call the hotline and get advice from an employee without waiting on the line for a long time and transferring the call between specialists.

Today, most banks offer the same set of products, the same terms and conditions. To attract new customers, they are trying to seriously expand the range of services provided. And in order to become a leader in this market, it is necessary not just to meet its requirements but to be ahead of other players by at least one step. Lenders take care of their reputation-many potential customers are trying to learn as much as possible about lenders and collect information with the help of the Internet – read the reviews of the previous lander’s clients.

As for the interest rate, most often borrowers are guided by the declared amount. They believe that a lower interest rate means lower loan overpayment and monthly payment. However, the lender is not ready to give the minimum interest rate to every borrower. Many people put forward certain requirements-for example, the proportion of the first payment and the loan, the form of income confirmation, the loan defect, etc. They can also look at the employee-if he/she is a partner of the bank, they can reduce the interest rate.

In addition, banks charge additional costs for loan processing.

Choosing a mortgage loan

To get a mortgage loan, you need to decide:

  • how much money you have for the initial payment;
  • how much money you need to borrow to buy this housing;
  • how much money you are ready to pay every month;
  • how soon you can pay off the loan.

Another question that you need to consider in advance is whether you apply for a commercial program or try to get a social mortgage. Social programs are not provided for all borrowers. To become a participant of such a program, you must meet certain criteria.

For example, social housing programs are offered to poor citizens who live in real estate that does not meet the established minimum standards of living space per person or do not have their own housing at all. Thanks to a special social program, people can get help when applying for mortgage loans. To do this, they must get the status of the poor.

The mortgage program for a young family implies the most favorable conditions: a long loan term, a minimum priority payment, and a reduced interest rate. At the same time, banks are loyal to the minimum work experience and not too high monthly income of young borrowers.

To understand which mortgage is better, you need to pay attention to:

  • mortgage term;
  • interest rate;
  • additional payments;
  • the amount of the initial payment;
  • requirements that are imposed on borrowers: age, work experience, minimum income, etc.;
  • documents attached to the application.

At the moment, the borrower can get the following loans:

  • a standard loan with a down payment and an average interest rate;
  • a loan without a down payment;
  • a mortgage for the purchase of a new property secured by the existing one;
  • a mortgage with deferred payments, in which the borrower pays only accrued interest in the first year.

If you do not know how to choose the right mortgage, it is better to contact a mortgage broker. The specialist will advise you on all available mortgage programs, tell you which lender is best to apply for a mortgage, help you collect the documents and correctly apply. In addition, you can use a broker to find out the nuances of your credit history and, if necessary, correct it if the details are specified incorrectly.

Life hacks when choosing a mortgage lender

Choosing a mortgage is not an easy task. There are several nuances that can bring you closer to choosing the “lender of your dreams”.

Pay attention to commercial banks

Often the hyped name of the lender is tempting. Many clients are willing to accept less favorable offers from well-known banks that are supposedly controlled better by the state. They ignore small commercial banks that in fact offer more loyal and flexible terms. It is worth looking less at the name of the lender and more at the proposed conditions – the annual rate, the amount of the down payment, additional fees.

If you are an individual entrepreneur, look for special programs

If you are registered as sole proprietors and owner of your own businesses, you’d better apply for loans under programs with simplified consideration of borrowers. It takes longer for banks to check applications for standard programs and they require too many documents. However, the choice in this case will be limited – some banks are not ready to lend to entrepreneurs with an imputed form of taxation because in this case, it is difficult to transfer real income to the enterprise.

Look for promotions

Banks periodically arrange special promotions to attract new customers. But you must choose them carefully. For example, most often programs are advertised for certain new buildings or for specific developers with much more favorable terms than standard bank products. But will you benefit in this case? This is a big question. Yes, you will have a low APR in the contract, but the developer will compensate the bank for the unacceptable benefit under a special agreement. The developer will include this amount in the price of the apartment.

You will borrow a higher amount, the bank will receive part of the profit in advance, and if you decide to repay the loan ahead of time, nothing of this amount will be recalculated. Usually in this situation, developers offer customers a choice before the transaction: a low rate or a discount on the apartment, but without mortgage benefits. Many people choose the second option because it is more profitable to take out a smaller loan at a higher rate than to take out a large debt at a low-interest rate.

There are also joint subsidy programs with developers, which are worth paying special attention to – as a rule, they are the most profitable. Sometimes these are promotions linked to dates-new year’s or” spring “and” autumn” offers. However, there is a nuance here – see if the developer raised prices before “lowering” them. But in general, if you set a goal, you can always find better conditions.