Save Money On Your Mortgage After It Begins

Note: If you want to save money on your mortgage, you've got plenty of options. Keeping an eye on the progress of your mortgage can help you save serious amounts of money.

Step 1) Always know what rate of interest you are paying

If you know the level of interest that you pay on your mortgage it will allow you to be on the constant lookout for a better deal. Just because you’ve already got a mortgage, it doesn’t mean that all the hard work is done, nor does it mean you should just accept the interest rate that your lender wants to charge you.

Use the internet to compare the rate of interest you pay with the best offers that are currently available. Here is the crucial point, you may be paying interest on your mortgage that is 1%-2% more than you need to.

‘So what?’ you may say, ‘what’s 1%’

Much more than you may imagine. That modest looking 1% could be the difference between thousands of dollars each year and tens of thousands over the course of an average 25 year mortgage. That’s tens of thousands that could be yours and under your control, rather than needlessly inflating the already bloated profits of the banks.

Watch this! Typical cost of a $200000 repayment mortgage over 25 years at 5% = $350000 Cost of same mortgage at 4% = $316000. Total saving $34000

Are you still as dismissive of ‘just’ 1%?

Look upon the situation this way. If you’re paying more than the ‘going rate’ for your mortgage, you’re subsidising your lender’s ability to offer special low rate deals to other customers (e.g. to attract new borrowers).

Fair? Are you joking? But since when was life or for that matter the banking system fair?

Lenders realise that most people can’t be bothered to change their mortgage provider, even when they’re aware that a much better deal is available. They know about the public’s inertia (could that be a nice way of saying laziness?), and believe me, they take full advantage of it.

And the solution? Don’t let this happen to you, don’t let your natural resistance to change cost you money. Keep up to date with what is on offer and if you can find a better deal elsewhere then consider switching your mortgage to that lender. Select the best rate available and when it becomes not so special move on to the next deal.

But before deciding whether to remortgage consider the following checklist;

• Are there any redemption penalties with your current mortgage deal?
• If so, what date will they apply until, how much would they cost at present and will the cost of them gradually reduce until they expire?
• Could you avoid these penalties by delaying your decision to remortgage?
• What is the best deal your current lender is prepared to offer?
• What is the best deal your new lender is prepared to offer?
• Will your new lender cover any of the costs associated with remortgaging (e.g. valuation fees, legal fees)? It’s often worth haggling over these extra costs. The lender may pay for them in order to secure your custom.
• Would any redemption penalties apply to the new deal, and if so, for how long?
• Does your new lender have a history of offering competitive mortgage rates (i.e. for when their initial deal expires)?
• Do the potential savings during the life of the new deal outweigh the costs?

Potential Savings = Total savings over the period of the new deal less;

• Redemption penalties
• Discharge fees
• Valuation fees
• Legal fees
• High Percentage Lending Fees

Next: Save Money On Your Mortgage After It Begins - Step 2

Previous: Offset Mortgages

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