Mortgage: Saving Money And Lowering Cost

Save money on your mortage with this expert advice.

It is possible to save thousands of dollars on your mortgage. To do so, however, you've got to be up with the financial play from the very start. Here are 9 key steps that will help you to save big dollars on your biggest investment:

(1) Consider a fixed interest rate: Fixed rates of interest let you know exactly how much you are going to pay - they don't change. Fixed rates have traditionally been lower than floating rates, which can be altered at any time by the lender.

(2) Shop Around: Don't just go to the bank. It costs you nothing to make use of the services of a mortgage broker, who will act as an intermediary between you and the lender. A broker will take away much of the hassle for you and may also arrange valuations, legal services and insurance. A broker will also steer you towards the best deal. Also check out internet based lenders.

(3) Negotiate: Mortgage lenders are in a competitive business. They need your business. So, try to negotiate around the edges. You probably won't be able to get them to drop the interest rate, but you should be able to negotiate a discount on their fee. Give it a shot.

(4) Pay fortnightly rather than monthly. There are 26 fortnights in a year but only twelve months. So, by paying fortnightly you actually make an extra payment each year. This means you can save many thousands of dollars over the term of your mortgage by paying every two weeks.

(5) Pay as much as you can: Don't be tempted to stretch the mortgage term out too far in order to make your repayments smaller. This short -term thinking will cost you big over the total period of the loan and, in addition, you'll still be making repayments when you should be focusing in on your retirement.

(6) Keep payments at original rate: If your interest rate drops on a floating mortgage, the bank will lower your payments. But if you tell them to keep them at the former rate, you will cut years off the term of your mortgage.

(7) Make lump sum payments: Paying a lump sum on your mortgage is exactly the same as investing that money at the current rate you are paying on your mortgage. That's a pretty good investment - and it will cut years off your mortgage term.

(8) Keep a check on things: The mortgage lender is not infallible. Ask for regular statements and go through them to make sure that their figures stack up.

(9) Don't discharge the mortgage: You've finally paid it off. You can't wait to discharge the mortgage. But there is nothing preventing you from keeping it open. This way you won't have to pay legal fees if you ever decide to borrow against your property in the future.

The bottom line on saving on your mortgage repayments is to find the best deal at the outset and then to work determinedly to repaying it as quickly as possible. By doing so you'll be soon able to utter that magic word which will make your life so much more pleasurable - "╦ťfreehold.'

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