5 Ways to Save Money on Your Mortgage

As property prices continue to rise, so does the cost of getting into the market. In fact, housing is the second-biggest expense for most Australians, and with first home buyer grants reducing nationally, it’s never been more challenging to save that initial deposit.

That said, taking out a mortgage remains one of the most effective ways of accumulating wealth over time. After all, a house is a long-term asset that should increase in value over time. However, what may begin as an affordable stretch in your budget can become an expensive burden if not managed effectively. Here are some tips to help you save money on your home loan:

Know your rights.

When it comes to repaying your loan, you have certain rights as a borrower. You are specifically entitled to a written statement outlining the principal, interest, repayment dates and amounts, and the name of your lending institution.

You also have the option to request a change in your repayment schedule if your circumstances change. Before you sign on the dotted line, make sure you understand all of the loan’s terms and conditions. This will not only protect you financially, but it will also provide you with peace of mind in knowing that you were treated fairly.

Shop around for the best deal.

As with any major financial transaction, it makes sense to shop around and compare various options. This is particularly important with home loans given the high costs associated with securing a loan. If you currently have a mortgage, you can save money by refinancing at a lower rate.

Check out a comparison site to see if you’re paying more than you should. If this is the case, it may be worthwhile to refinance to a lower-interest home loan. If you want to buy a house, shop around for the best rates. You may even be able to negotiate a lower rate by putting down a larger down payment. Alternatively, increasing the size of your down payment may allow you to reduce your finance costs.

Consolidate other loans.

If you have other outstanding loans that are at a comparatively high-interest rate, now could be a good time to consider refinancing them. If you can lower the rate of interest on your existing debts, you can free up additional cash for savings or cover other expenses.

While a home loan is often the most effective way to secure a lower rate of interest, it doesn’t necessarily have to be a mortgage. You can choose to refinance any type of loan to lower your cost of borrowing. Just be sure to shop around for the best rates to make refinancing worthwhile.

Consider a variable rate home loan.

As a first-time home buyer, you may be tempted to take out a fixed-rate mortgage. However, doing so means you’ll be locked into a payment that won’t fluctuate as interest rates rise and fall. While a fixed rate is appealing because you know exactly what your monthly payment will be, it’s worth keeping in mind that interest rates will most likely increase in the future.

If rates climb considerably, you could be paying far more each month than the amount currently shown on your fixed rate contract. With a variable rate, on the other hand, you’ll have the comfort of knowing that your payments will increase or decrease as interest rates fluctuate.

Get professional help to save money on fees and wastage.

Are you sure you’re getting the best deal possible? While it’s not uncommon for borrowers to secure lower rates by switching lenders, it’s not always easy to switch. The process of changing lenders can be lengthy and costly if you don’t know what you’re doing.

However, there are ways you can save money by switching lenders. For example, you can get a free mortgage comparison by requesting a quote through an online mortgage broker. Alternatively, some services allow you to compare multiple loan offers from different lenders in one place. Whichever method you choose, it’s important to shop around to make sure you’re getting the best deal possible.

Conclusion

Home loans can be an effective way to build long-term wealth, provided you make smart financial decisions. To save money on your home loan, know your rights, shop around for the best deal, consider a variable rate home loan, and get professional help to save money on fees and wastage.

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