Gain Negotiating Advantage When Buying Buying a property requires good knowledge of market conditions, personal finances as well as the ability to judge what a good investment is. Being able to negotiate realistically is equally important when you decide to make an offer. This is why you should be well prepared before you are actually in the position of preparing a formal offer to purchase.
Market Conditions Look at the long-range prospects of your borrowing commitment. During a period of low interest rates, you should take into consideration whether or not prices are expected to increase in the future. Consider locking in at a reasonable rate for the opportunity of significant gain in the future.
How Much Can You Afford? Before you go into the market to look for a house, review your current spending and loan commitments. A mortgage lender will use a ration of about 30% of gross income as the amount of mortgage you can carry. If you review your finances beforehand, you will have a good idea of your own capacity. Property tax is an additional cost that must be factored into the equation.
Once a price range for your prospective home purchase has been settled, the next step may be locking in a mortgage interest rate with a pre-approved mortgage. When you know you are already approved for a mortgage, this will increase your comfort level at the negotiating table. To arrange a pre-approved mortgage, you meet with a lender who will confirm your borrowing capacity, perform the required credit review and make an agreement to honour a particular interest rate for a specified time.
Existing Mortgage If there is an existing mortgage on a property you are selling, or on the one you are looking at, there is more to consider than the balance outstanding and the interest rate. Be aware of any pre-payment terms. If your mortgage is open, you can repay it at any time without penalty. However, your lender may have “lock-in” clauses. These may include payment of a bonus or the lender’s interest revenue loss for the balance of the term should you repay early. Clarify all of this with your lender.
Portability One very important feature is mortgage portability. That means you can transfer your existing interest rate, loan balance and remaining term to a new mortgage without penalty, although there may be some restrictions. Be sure you understand what they are before you get into negotiations.
Your REALTOR® has the expertise to help guide you through the negotiation process, keeping your best interest in mind.
Contact me I am one of just 3 Trusted Saskatoon REALTORS ®. I am looking forward to helping you sell or buy your home! I love what I do and I take great pride in providing excellence in customer service to all of my clients. I strive to find them the perfect new place to live while negotiating the best terms and price possible.