Low interest mortgages, a users guide.

Low interest mortgages, a users guide.

We all have our secrets to get a good deal. Finding a bargain is for many people more important, exciting and fun than whatever they actually end up buying. When I visited Morocco for the first time I got a great introduction to Haggling 101. At first it was a little strange, arguing with the shopkeeper how much to pay a souvenir, a rug or whatever was on offer. The truth is that the owner enjoyed the bargaining more than I did. Of course shopkeepers are quite happy when a foreigner comes and is quite happy to pay inflated pre-bargaining prices. Nevertheless they enjoy the haggle as the customers do. After a little time I got the principles. Offer a third of the original price and settle for half, and y0u can still rest assured you have been taken for a ride. Those were the words of advice of a friend that lived there.

In Spain, the country I grew up in, finding a bargain is more about knowing where to shop and when to shop. Las Rebajas, or the Sales, are a national event with Rolling Stone length queues waiting outside the best malls waiting for the Sales day to begin.

With home loans finding a bargain is a little different. The secrets, tips and techniques that work when you are looking for a suit or a rug may not work. How can you find low interest mortgages in the current financial mess. Needless to say it is not easy and there are no fail proof routes but there are some general principles that can help.

First, find out your current credit situation. That means finding out your credit score and having a look at your credit report. This will help you see where you need to improve the image you present to lenders. Lenders (banks and finance companies) are happy to give good deals to customers that are likely to pay and on time. Your credit score helps lenders assess what kind of a borrower you are. If you are planning to buy a house in the short to mid-term it is a good idea to take steps to improve your credit rating.

Second, shop around and don’t rush. Don’t just take whatever y0ur current bank provides or the first one that gives you an offer. Decide what kind of house you need and work out how much that is likely to cost. Then, armed with your knowledge of your credit score and after improving it, ask various banks to provide you with their best deal. Do this before you have chosen your future house. This will do two things it will help you budget and not get carried away into paying too much for the house of your dreams. Secondly, it will provide you with extra leverage when you want to negotiate a price with the seller. A buyer with pre-financing is like someone paying cash in a car dealer, he gets a discount.