Many homeowners are looking for creative ways to save money on their mortgage repayments. With many tricks available in your arsenal how do you know which option is right for your savings plan? Let us help clear up some uncertain areas of mortgage savings to help find you the best option.
It Pays To Shop Around
Shop around for a different bank with better rates. If you’re happy with the service of your current financial institution, but they aren’t offering the best rate, it may be worth looking at other options as well. In some cases, other banks offer a better interest rate within a specific period than the one you’re currently paying on your mortgage. You could save thousands off your mortgage bill just by switching banks.
Put A Larger Down Payment
Put a larger down payment into your mortgage. The first thing you need to remember when putting a larger down payment into your mortgage is that it is still a mortgage. So why put more money down? The main reason for doing so is for security––a bigger deposit provides better protection against losing your home. With a larger down payment you end up saving big on the duration of your loan. For example, a $10,000 down payment on a $100,000 home would cut almost two years off the length of your loan. If you’re like most homeowners and plan to own your home for more than five years then putting a larger down payment is one of the best ways to save money on your mortgage.
Leave Yourself Some Savings
Although it seems a great option to put all your savings into the principal it can become risky. It’s a great feeling to watch the principal shrink, but it can also be discouraging if you end up running out of money. In order to avoid this problem keep your savings in a separate account away from your mortgage. You may have to sacrifice seeing your principal balance decrease quickly, but you’ll still be able to save money on interest charges. Your best bet is opening up an online savings account at a bank or credit union.
Do Not Extend Loan Terms When Refinancing
It might seem like you’re saving when changing to a different interest rate, but it is important to work out the mathematics over the duration of the loan. If you’re saving on the interest percentage but you will pay for more years this can become more expensive over time.
Before you refinance, it’s a good idea to crunch some figures and find out whether having a longer mortgage term really makes sense for your personal savings plan.
Is There A Prepayment Penalty?
There may be a prepayment penalty if you pay off your mortgage sooner than expected. If there is a fee for paying off your mortgage in advance, you want to make sure it’s worth it. Usually, you will not save money by paying off your mortgage early rather than when it’s due, unless there is an interest penalty or other fees involved. Perhaps all the extra money you paid to save money on the duration of your loan will be penalised against you later. This is a very important risk factor to acknowledge in your retirement plan.
Cash Out Refinancing Against Rising Housing Markets
Cash out refinancing is where you refinance your home and take out extra cash from the equity in your home. The cash out can be used for a number of different things including paying off an existing loan, paying for college, or getting a new car. The amount you receive will depend on the appraised value of your home. In many cases you’ll get more money than what you put into your home when it was first purchased, this is because the value of homes have risen considerably over the years. If you cash out refinancing be sure to consider the interest rate that is attached to this type of loan as well as any other fees that may apply.
Make An Appointment With Your Lender
You can stop by your lender’s office to ask whether there are any changes that you could make to your mortgage account. Take into account the type of mortgage you have, as well as your history with the lender. In some cases, lenders are willing to customize their products for their customers.
Finding The Best Mortgage Deals Online
If you’re in the market for your first home or adding to your investment portfolio being up to date with the market conditions is paramount. With the addition of technology in the real estate industry it has never been easier to find the best rate available to you. If you’re aware of the suburb and location you may like to buy in then a simple online search can reveal unmatched mortgage rates available now.