You may use your home mortgage as a line of credit and get benefits. But, if you consider seriously about being free from mortgage debt as soon as possible, you must prepare a unique strategy for it. Here goes some useful strategies which can cut off the loan term and save thousands of dollars from your wallet.
1. Search and find the best suitable loan
You can choose any source to find a suitable loan. It can be through a real estate agent, a mortgage broker or all by yourself. You just need to compare the sources with each other, by this way you can maximize your profit.
For an example, suppose you borrow $12,00,000 as a mortgage. If anyhow you can manage to reduce the interest rate by 1%, it will save you a great amount and shave of several years. You should be searching for a suitable interest rate along with the best offer you can get from the market.
Different type of rates:
• Standard variable rates - Normally, the movement of cash rates influences theses rates. These rates generally come with fully-featured loans.
• Basic variable rates - These rates are generally lower than standard variable rates. These rates don't have as many features as standard variable rates do. But significantly, basic variable rates have a provision to accept extra payments.
• Fixed rates - Especially helpful for new buyers and first time buyers. You can take the help of a mortgage broker, he can get you the best deal through his experience and better negotiation skills while dealing with a lender.
2. Modify your repayment frequency
Whether you are aware of or not, your home loan interest rates are calculated on a daily basis, not monthly. As you are making the payments monthly, you are paying a little more.
If you increase the frequency of your money transactions, you’ll surely pay off your loan ways faster than before while paying less. You can check how your bank calculates your interest rates. Go to your bank and ask them to change the frequency of your repayments.
3. Pay early and more
Normally by saying “mortgage”, we mean a structure, where a borrower is going to pay the interest amount throughout the initial years. After that, your payments will reduce the unchanged capital gradually till the loan term ends. But, if the borrower pays a greater amount than the minimum requirement early, the principal will also reduce gradually. It means, from the next month onwards, the interest will be calculated on that smaller outstanding principal amount.
Develop a budget to cut off your extra costs. This simple change will help you to restrict your spending habits and save you enough dollars to pay off your mortgage faster.
4. Stay away from big offers
You’ll surely get numerous great offers at the first year of the loan. Initially, those offers will look very attractive, but you need to verify - Are those offers really important to work out? Are those offers really going to help you to reduce the total cost of the loan over the long term? No, they will not. You can later use any of the ongoing discount offers as an alternative of the introductory offers. These offers may provide you great discounts over the life of the loan, unlike the initial offers.
5. Get a better deal by using refinance
Interest rates are constantly changing. So, you’ll get many loan offers than the one you have selected 5 years ago. But, you can still save now and a good amount also. How?? Refinance your loan. Get new interest rates and flexible terms which may save plenty of dollars from your wallet. It’s worth negotiating for a better rate, you can do it yourself or you can hire a broker.
The mortgage industry is very much competitive these days. So, you should continue learning new updates and keep looking for better products to grab.