Tips for Saving on Your Mortgage
Owning a home is the ultimate goal for many Kiwi families and although prices are now soaring, purchasing a home is one of the best investments you can make. Managing mortgages can be tricky and expensive! So we have come up with some of the best tips for saving time and money on managing your home loan.
Take your time
Buying a home is exciting and highly competitive resulting in many pressure induced and rushed decisions. Remember, buying a home has many extra costs that you must consider. These costs can include legal fees, building inspections, rates, body corp fees and any renovations that the home needs. Ensure you are able to afford these extra costs before you rush into buying your home, otherwise you may find yourself struggling financially or worse, falling behind on mortgage repayments!
Only borrow what is needed
It is tempting to pay the lowest deposit rate to purchase your home and your loan company may encourage you to borrow more than you need! Based on your budget, determine how much you can afford to pay and never borrow more than needed. The slower you pay off your mortgage, the more expensive your home loan will become in the long run.
Choose your lender wisely
Shop around to pin point the lender that will save you the most. Remember, you can always switch lenders if you see a rise in costs! However, be aware of the possible fees when switching lenders, including establishment fees.
Pay lump sums
Pay additional voluntary payments when possible. If you come into some extra cash such as a bonus, place a portion towards paying off your mortgage. Doing so several times a year could save you a lot in interest!
Boost your repayments
Boosting your repayments by approximately $20 a week could save you thousands in interest and you could be mortgage free months or even years earlier! Be sure you are always paying the maximum you can afford i.e. if you receive a pay rise; boost your repayments or the frequency of payments. If you have a fixed rate loan, be aware that you could get charged an early repayment fee, a fixed rate break fee or an early exit fee. If possible choose a flexible home loan that allows you to make extra payments at any time with no extra costs!
Disclaimer: The above information is general in nature and not intended to be financial advice. You should consider seeking professional advice before following any suggestions in this blog/website.