How to qualify for low interest mortgages

Read on and know how you can easily qualify for low interest mortgages.

07:55 18 June 2013

Taking out a mortgage is definitely one of the biggest financial decisions that most of us make. As this is usually a 30-year commitment, it’s extremely important that you get the lowest interest rate possible, as this could mean thousands of savings. Here’s how you can qualify for low interest mortgages:

 

• Have an impressive credit score. Lenders will determine the interest rates that they’re going to charge you based on your credit history. If you always missed payments before or if you failed to settle your debts with other lenders, banks and other financial institutions will see you as a high-risk client. As a result, they might charge you a higher interest rate and give you shorter payment terms.

 

• Bigger down payment. The more money that you pay for your house’s down payment, the more likely that lenders will charge you lower interest rates. It is for this reason that experts advice that you save at least 20per cent down payment before you apply for mortgage.

 

• Go with short-term loans. Lenders will be most likely to lower your interest rate if you opt for a short-term loan. This means that you commit to pay the money you owe for say 5 to 15 years instead of 25 to 30 years. Although this may mean higher monthly repayments, it would also definitely mean a lower interest rate and this can translate into huge savings.