Lowering your mortgage rates saves you money. For investing in residential properties, your rate is based on two key factors: the prime interest rate and your credit risk. The prime rate is set by a national banking authority, which in turn is affected by factors outside its borders. Rates among countries seek some measure of uniformity to prevent money from fleeing for investment across international borders.

Your lender has no control over the prime rate, the rate on which it bases its own rates. But those rates vary by institution. Lenders like banks compete by tweaking the rates it offers and by offering various services to give mortgage holders value. But mortgage rates for investing in residential properties are, as are all loan rates, also based on how good a credit risk you are.

The theory makes sense: If you have a good record of paying off your debts, then lending you money carries a lower risk because the loan is a safer investment. In turn, a higher risk warrants higher interest rate charges. So the first way that you can obtain a lower mortgage rate is to improve your credit rating. To improve your rating, put your personal finances in order. This is the most important thing you can do to get a lower mortgage rate.

But you have other means to earn a lower mortgage rate. One way is simple: Develop a good relationship with your banker. Banks want to keep good long-time customers. If you’re one of their valued customers, you can probably negotiate a lower mortgage rate. Using automatic deductions from your account can also earn you a break.

Another way involves an obvious strategy: Refinance your current mortgage. Prime interest rates constantly fluctuate. If they drop over time, it might be worth refinancing your current mortgage for a new one at a lower rate. However, your lender will charge you a hefty penalty. Do your calculations over the remaining years of your mortgage term to decide whether refinancing is a cost-effective option.

Yet a third way to obtain a lower mortgage rate is to reduce the number of years in the term of your mortgage. Short-term residential mortgage rates are lower. Because the mortgage will be paid off more quickly, usually in a term of 15 or 20 years, the loan is more attractive to lenders. However, payments are much higher. The trade-off is that you’ll own your home sooner.

By planning a mortgage strategy and by shopping around, home buyers and homeowners can get lower mortgage rates on residential properties. In your planning, be sure to also consider secondary costs such as legal, bank, and appraisal fees.