Why Is My Mortgage Interest Rate So High?
Home loan applicants and current homeowners may wonder why their mortgage interest rates are so high. High mortgage rates can be the result of many different factors, including the following:
- Home deposit amount
- Type of home loan
- The home loan term
- The home’s location
- The applicant/homeowners credit score
- Home loan amount
- The home’s price
When an individual purchases a home using a home loan, they will be required to pay a deposit. The deposit amount is an influencing factor for mortgage interest rates, as a larger deposit will result in a lowered interest rate, and a smaller deposit will result in a higher interest rate.
The location of the home, loan amount, and home purchase price also influence a mortgage interest rate. Different areas and home loan options will have varying interest rates, as well as home loan terms.
An individual’s credit score is a key factor in determining why their mortgage interest rate is high, whether they are potential borrowers, applicants, or current homeowners. A mortgage broker will perform inquiries on an applicant’s credit score and financial history to determine their risk as a borrower.
A low credit score indicates a high-risk borrower, while a high credit score indicates a low-risk borrower. Improving your credit score is a great way to work toward lowering your mortgage interest rate and repayments, while also making you look more appealing as a borrower to a lender. There are also various other ways to lower your mortgage interest rate, including refinancing your mortgage, negotiating your interest rate with your mortgage broker, and making extra mortgage repayments when possible.