Tips that will help you slash your mortgage payments
Your mortgage is one of the biggest financial commitments you’ll ever make—and it’s one that will last years.
Ill-informed decisions can easily cost you hundreds of thousands of dollars over the lifespan of your home loan. This translates to less money for savings, your children’s education, retirement, and living expenses.
Most borrowers are surprised to find out that a low interest rate is not the most significant factor in reducing the overall mortgage cost and payment period.
If you want to be debt-free sooner, then check out these tips:
- Review your home loan at least once a year.
Home loans generally become uncompetitive after a few years. With new products being added to the market regularly, it pays to do a review of your home loan at least once a year to determine if your current loan still meets your priorities. You may discover that there is a better product out there that would help you save on interest charges, gain access to better services, and increase your home loan amount.
2. Overpay your mortgage.
Making payments weekly or fortnightly can help you clear your home loan much faster. This tactic can also save you thousands of dollars in interest charges.
Use the calculator https://brickhill.com.au/extra-repayment-calculator/ to see how much interest you could save by making extra payments.
3. Don’t focus solely on interest rates.
The interest rate isn’t the only factor that influences the total cost of your home loan. In fact, going for the lender that offers the best initial interest rate doesn’t mean you’ll get a cheaper loan.
Interest rates can change soon after your loan starts, and you can quickly end up with a very expensive and uncompetitive rate. Moreover, there are additional fees that can make a loan more expensive than it seems.
Additional fees might include:
- application fees
- valuation fees
- establishment fees
- legal and settlement fees
- rate lock fees
- lenders mortgage insurance
- early pay out fees
- discharge fees
In other words, if you want to objectively assess the overall cost of your loan, you’ll need to look at the bigger picture.
4. Avoid going directly to a lender.
Lenders like it when you walk into their doors without being referred to by a broker, as they can pocket the commission they would normally have given to the broker. There is no financial saving to you by going direct to a lender as the broker’s services to you are at no cost to you.
If you deal directly with a bank, you won’t be able to ask a mortgage broker for more in-depth and comprehensive advice. Other lenders may provide loan products that are better suited to your finances and priorities, and you close yourself to these possibilities by going to just one lender.
By consulting an experienced mortgage broker with a wide range of lender contacts, you could gain access to better deals than are currently available on the market.
-Your Mortgage (Michael Mata)
