Are you currently making your way down to the mortgage monsters? Stop it from happening, now is your chance to use and consider a few approaches to lighten up your financial burden.
Beat up mortgage drain and apply these ten helpful tips.
1. Have more Re-payments
You might probably think that loan providers will give you the most credible deal when you get a home loan and set up your repayments. Setting your repayments weekly or fortnightly would be very ideal than setting it monthly. This repayment method will help you cut your mortgage burden.
According to Nicole Pederson-McKinnon from her book “Halve Your Debt and Double Your Freedom – Without the Mumbo Jumbo”, you need to use the calendar.
She pointed out that you can possibly make repayments 4 times a month, to be able to complete the payment in less than a year. So, why wait for a year to complete the pay if you can make it a few months earlier? The same also applies with lump sums. Maybe you acquired it from an inherited asset or a large tax return, set it to your mortgage and you will be able to see that the total amount due and the monthly interest rates will be reduced.
The more frequent you pay for your mortgage, the more savings you will get from the interest rates. This is regardless of how much your home loan interest is from the monthly charges and daily balance in arrears.
2. Continue Paying your Old Interest Rates
Despite the fact that rates have stabilized lately, most finance experts still recommend that property owners must continue to take care of their current home loan payments regardless of the low rates to be able to save a good amount of money over time. Pederson-McKinnon suggests that one must never cease to pay or even decrease the mortgage repayments. It is still helpful if you maintain you mortgage repayments at the same level even if the rates fall down or you get a much better remortgage deal.
3. Choose the best Home Loan and Refinance your Loan
Is your mortgage loan filled with unknown fees and many products which you don’t need? Perhaps it is time for you to think about re-financing it to a more sensible option, one which is suitable and within your financial capacity. Create a list of options which you would like to have and try to include a list of the things which you do not necessarily need. Consult it with your mortgage broker and determine which options are available for you.
4. Cut down Your Personal Expenses
Reducing a small amount on your personal expenses will help you compensate for your mortgage a lot easier. Cut down buying coffee during breaks, take your lunch at the office, make use of the local library and other similar resources, and take a local vacation during summer instead of flying to another country. Small sacrifices in spending can indeed help.
5. Choose a Fixed Rate
If you have a limited budget and you want to determine the specific amount of which you will be paying out every month, consider having a fixed interest rate on your mortgage loan. Find out your chances. Think about fixing a particular portion of your property loan. And before you make any decision with regards to this matter, it would be best if you seek some financial guidance concerning your financial situation.
6. Renegotiate Your Interest Rate
The home loan industry is changing constantly. Therefore if you’ve acquired your loan for a couple of years, it would be best if you consider renegotiating your existing interest rates. Confer with your mortgage broker and find out what options they can provide.
7. Ask Assistance
Ask your lender for considerations. For instance, you are currently unemployed because you need to look after your baby. Ask your loan provider to hold down your home loan repayment for the meantime. There are numerous loans which offer this service. However, you need to be aware because it can prolong the lifespan of your loan, and increase your amount of loan since the unpaid interest will be carried into the loan balance. Most of the time, this payment is due within 3 to 6 months. Your loan repayments can be possibly reduced if you are struggling with:
- Loan term extension
- Shifting to interest only re-payments
- Renegotiating interest rate
For more information regarding the options above, try to discuss it with your loan provider. Many loan providers offer adversity provisions for their clients in case they are having difficulties. So don’t hesitate to ask help if you badly need it.
8. Always make the Preparations
If you are having plans on starting a family or perhaps needs to make some property renovation, always make sure that you have prepared the necessary requirements ahead of time because it can result to a loss of income or you just might find yourself spending on additional expenses on your mortgage dues. You can however make use of the mortgage for your benefit. Say for instance, when you have an offset account connected to your mortgage loan; use it up to its maximum capacity by having your income paid directly to the offset account which goes along with your home loan.
Employ a credit card for your monthly expenditures but spend wisely, make sure you don’t pass your limits. You can then transfer the money from your mortgage into the credit card once your monthly bill arrives. This can make your money in the offset account work by decreasing your monthly interest amount. This is so far one of the best approach to cut off those mortgage monsters.
9. Discipline is the KEY
Always think before you buy. Ask yourself it is necessary for you to buy that fashionable handbag or that new gadget. Before you decide, think of your home loan repayments first. You can use that money to pay your home loan repayments or any amount you need to repay from your loan provider. In case your home loan includes a redraw option, do not redraw unless of course it is incredibly important. If you are carrying this out for too long, then perhaps you can think of some other type of loan.
10. Get an Insurance
If you are concerned about the existing economic status and your employment, then it would be wise to avail a life insurance policy and income protection/security. This can protect you and your family in case of job loss and unemployment due to health problems or perhaps injuries.
For those who run their own enterprise, be sure that you possess the appropriate insurance and coverage to pay for any damages from robbery, fire and etc.
The true secret to avoid mortgage problems is to not disregard any concerning issues. It should be handled directly as soon as possible. You must also lay out the best financial planning so you will be able to experience a desirable financial situation.