Your mortgage is one of the biggest financial commitments you’ll ever make—and it’s one that will last years.
Poor decisions could result in you paying thousands of dollars over the loan’s life. This translates to less money for savings, your children’s education, retirement, and living expenses.
As many borrowers discover, a low interest rate doesn’t necessarily mean a shorter repayment term or lower overall mortgage costs. Lenders are not willing to share money-saving tips because they can make more profits lending as much as possible and charging as high as necessary.
These are some ways to get out of debt faster.
You should examine your home loan at least once a year
Home loans become less affordable after a while. To ensure that your loan is still meeting your needs, it’s worth reviewing your home loan once a year. You might be able to find a better product, which could help you save money, offer better services, or increase your home loan amount.
Your mortgage payment shouldn’t be too high
To make your home loan clearer faster, you can pay it weekly or fortnightly. This can help you save thousands on interest.
Your lender and mortgage broker want you to stretch your home loan payments for as long as possible because they’ll be paid interest and trailing commission the entire time. In short, the longer it takes for you to settle your debt, the more money they’ll make.
Use the Advanced Mortgage Repayment Calculator to see how much you’ll save by making extra payments regularly.
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.
Your interest rate can change quickly. The rate you end up paying could be higher than you anticipated. Additional fees may be required, which could make the loan more expensive than you thought.
Additional fees may also apply
- application fees
- valuation fees
- establishment fees
- Settlement and legal fees
- rate lock fees
- lenders mortgage insurance
- Early payout 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.
Don’t directly approach a lender
Lenders love it when you arrive without being referred to a broker. They can then keep the commission they would have paid the broker.
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 offer loan products that fit your priorities and needs better. These options are not available if you only go to one lender.
An experienced mortgage broker can offer better deals than others. He or she will have a wide network of lenders contacts.