Mortgage Broker Tips- Save Money on your Mortgage! - By: Adam Parore, Posted on: 2007-08-09
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<html> <head> <title></title> </head> <body> <p><strong>Mortgage Broker Tips- Save Money on your Mortgage!</strong></p> <p>1. Make your mortgage repayments as high as possible </p> <p>By increasing your repayments above the minimum amount required by your lender you can put a pretty serious dent in your mortgage without compromising your lifestyle too much. This is because most of us tend to spend our disposable income on things we don’t really need. By increasing your mortgage repayments you will be effectively implementing a savings routine- one that will have spectacular results! Say you're looking to borrow $200,000 at 7.5%. Over 25 years, the monthly repayment will be $1478, and the total interest bill will be $243,400. But if you squeeze another $100 a month out of the family budget and add it to your mortgage repayment, the mortgage will be paid off in 21 years, saving a massive $45,500 in interest. </p> <p>2. Ask your Mortgage Broker for a reducing mortgage </p> <p>If you like the idea of paying a chunk of your principal off every month, then you've probably got a table mortgage. But a reducing mortgage is smarter. With a table mortgage, you pay mainly interest in the early years - later, you start paying off the principal. But with a reducing mortgage, the principal is split into even amounts that you pay off each month from the very beginning. This means that payments start high, because you're making monthly repayments of your principal as well as paying interest on what's outstanding. But as time goes on, your remaining principal gets smaller - and so do the interest payments. For more info on types of loans see HYPERLINK "http://www.adamparore.co.nz/which_loan.asp" http://www.adamparore.co.nz/which_loan.asp </p> <p>3. Consider a mix of fixed and floating interest rates </p> <p>To allow you to make the occasional lump sum repayment, or to drip feed funds into the mortgage when circumstances allow, you will need the flexibility of a floating rate. However because Fixed Rates have historically been lower than floating rates, it makes good sense to adopt the latter and save yourself some money! What you really want is a dollar each way. The solution is to split the mortgage, putting most of it on a fixed rate and some on a floating rate. This will give you the benefit of a lower interest rate on most of the mortgage, whilst still allowing you the option of varying the repayment terms on the floating portion. It also means you won’t be facing a penalty if you wish to make a lump sum payment beyond that typically tolerated on a Fixed Rate (usually up to 5% of the loan amount pa is acceptable without incurring a penalty.) </p> <p>4. Get a SmartLoan from HYPERLINK "http://www.adamparore.co.nz" www.adamparore.co.nz </p> <p>If you use a revolving credit facility and arrange for your salary(s) to be paid into this single account, from which both your monthly expenses and your mortgage repayments are made you will be amazed at the difference this makes to your mortgage overtime. As interest on these accounts is calculated daily the impact of your earnings will significantly reduce the interest payments, and the monthly surplus will be applied directly to the outstanding principal. Using the above technique a dual income family with two kids who wish to pay off their 25 year, $200,000 mortgage, as quickly as possible can expect the following; If both parents earn $30,000pa, and after meeting all of their monthly expenses including their mortgage repayments they have a surplus of $400 per month they will pay off their mortgage in 15 years rather than 25, and will benefit from interest savings of $136,000! For more tips on how you can save money on your mortgage: HYPERLINK "http://www.adamparore.co.nz" www.adamparore.co.nz</p> </body> </html>
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Adam is Mangaing Director of Adam Parore Mortgages New`Zealands fastest growing mortgage broking business.
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