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It’s no wonder that the majority of homeowners dream of
one day being able to pay off their mortgage and live a life free from
the shackles of interest rates, home finance and worries about meeting
the monthly mortgage payments. The largest expense the majority of us
take on in a lifetime is our mortgage and each month our home finance
payments take a substantial chunk out of our take home pay.
Just think what you could do with all the extra money
you would have spare if you didn’t have to meet your mortgage each
month! Interested? Well, here are five steps that you could take today
to substantially slash your mortgage repayments and the overall cost of
your home loan and even speed up your rate of repayment so that the day
when you’ve paid off your home comes that much sooner.
Step One - Demand Better Service.
As a loyal customer of your mortgage lender isn’t it
about time you were rewarded for your financial commitment, for making
your regular payments and for being a good, long term customer?
Well, you can be certain your mortgage lender will not reward you unless you ask for a better deal on your mortgage!
So get on the phone, call up your lender, ask to speak
to someone in customer services or the customer retention department
and explain that you’re looking around for a better mortgage deal.
Often they will offer you a blended rate for the balance of your term.
We recently had a client who was in a 5 year fixed term
at 5.35%. She called her bank and was told that the early withdrawal
penalty for her $130,000 was $1700. That’s a lot of money and she was
discouraged. However, we ran a rate comparison analysis and found that
she would save $3400. by switching her mortgage now. She saved $1700.
using only one of our steps.
Did you know, 20% of bank customers will sign their
mortgage renewal letter without bothering to check rates? The banks
count on this 20% to pad their profits so that they can give discounts
to borrowers who ask for it. Often all it takes is one request and you
will get a lower rate.
Step Two - Shop Around.
If step one doesn’t get you the deal you deserve, shop
around. Check the internet and newspapers for special offers from
lenders. Be sure to read the small print! A number of lenders offer
1.99% rates for 3 -6 months but the rate rises for the balance of the
term. You will have to add the two rates together and find out what the
blended rate will be.
Step Three - Get Help.
Get expert assistance in the form of a licensed and
independent mortgage professional. As independent brokers they have
access to and understanding of every single mortgage product available
and they should be best placed to assist you find a better deal than
the one you have now. A deal where your repayments will be less, your
interest rate will be lower and the amount you repay over the entire
duration of your loan is reduced.
Make sure your broker is fee free and remunerated by
any company you decide to take a mortgage out with. More importantly
than this, make sure they are regulated and licensed correctly. If
possible ask for professional references or testimonials.
Step Four - Cut Out All Extras.
Mortgage lenders are notorious for offering mortgage,
income disruption and life insurance at high rates. The lenders make
huge margins on these products. While they are of value, couldn’t you
find them at a cheaper rate elsewhere? Ask your mortgage broker for a
financial advisor who could offer you insurance at a better rate.
You could literally save yourself thousands of dollars each year in
insurance premiums!
Step Five - Pay It Down.
So, you’ve cut your interest rate down to size, reduced
your monthly payments, and saved yourself thousands on insurance
products - now turn all those savings back into your mortgage and repay
early. Leave your monthly payments at the amount you paid before and
you can shave years off your mortgage. Make sure that your new lender
offers pre-payments without penalties. Many of the lenders allow you to
increase your payments by 15% per month and to pay up to 15% of the
original mortgage amount. Some lenders will let you double up your
payment amounts.
If you follow the 5 steps above you will be able to achieve your financial goals faster and easier than you thought possible.
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