When you approach a lender to take out a mortgage loan, your desire is to get the best terms for your particular circumstances and to be able to pay off the loan as quickly as possible while cutting interest as much as possible. Let it be known to you, however, that many people have approached their banks or other lenders with this same desire but have, unfortunately, ended up with disappointed expectations.
The 5 techniques discussed here will help you get the best loan terms with the widest latitude to pay it off quickly, thereby achieving a significant cut in your mortgage principal and interest. The methods may not all work for everybody, but I am confident that everyone will find some that appeal.
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One, borrowers must come to the realization that the cheapest loan is not necessarily the best. You must decide what you want right from the onset. This will help you to decide which loan is best for you. For example, if you aim to pay off your mortgage loan as soon as possible, then you should know that you cannot afford being stuck with an inflexible loan. This might sound like a contradiction, but the fact is that the home loan with the lowest initial interest may not be the best loan for those who want to pay off their housing loan as soon as possible. So, whether you want to buy a home or you are a home-owner who is thinking of refinancing into a seeming cheaper loan, look carefully and ask questions especially as some loans which appear cheap initially often turn our to be very costly on the long run. Be warned!
Two, ensure that you check out add-ons and rewards thoroughly so as not to end up entrapping yourself. Add-ons and reward may sound, but they may not be right for your circumstances. Due to competition, lenders now have a diverse line-up of loans that incorporate special add-ons or rewards aimed at enticing you to do business with them. These rewards include discounts on many of the lender's financial products, fuel vouchers and free holidays. These rewards have the potential to deliver genuine savings and thus boost your ability to repay your mortgage quicker. It is, however, important to approach these loans with caution as they may not suit your circumstances. The major risk is getting so attracted by the rewards that you overlook checking out the other features of the mortgage. What good is it if you get a supposedly free holiday at a cost of taking out a housing loan that has a high annual fee or does not suit your needs altogether?
Three, consider using your pay packet to cut down on the amount on which you are charged interest. This is called "Salary Transaction Loan." Whether you are about to take out a home loan or are already repaying one, this is worth checking out. It is a relatively new facility which can help you to pay off your debt quicker. The good thing about this loan is that on pay day, your entire salary goes on to the mortgage and immediately reduces the amount on which you are charged interest. Another juicy thing about the salary transaction loan is that you do not have to bother about paying for your running expenses. The account provides you with a credit card that has up to 55 days free credit to cover your expenses. You can make use of this to cover all your expenses, while making sure you draw down on your account to pay off your credit card within the interest-free period.
Four, avoid the common traps and cut your mortgage. Many borrowers have been caught up with unexpected fees or unreliable brokers. You can avoid this. One smart way to avoid this is by fixing the interest rate on your mortgage loan. This has the added advantage in that you can save a lot should rates rise. Unfortunately, this technique has its downside. It can turn out to be costly. For one, you may not be allowed to make extra repayments until the fixed-rate term is over. In other words, you are locked in to paying interest on the full amount for the fixed term even when rates are falling. Furthermore, if you decide to switch out of the fixed-rate loan to a variable rate, many lenders will slam the "break costs" on you. This is the difference between the interest you would have been charged if the fixed-rate loan had run its full term and the interest you are set to pay on the new variable-rate loan.
Five, negotiate with the lender for the best deal. This can reduce your fees for an instant surplus that can reduce the size of your loan. Borrowers often than not swallow hook, line and sinker the loan terms offered by the lender with no questions asked! Some other borrowers, either out of ignorance or sheer laziness, do not bother to look for alternatives; they simply accept the first loan they are offered without trying to negotiate a better deal. Others simply jump at a seemingly attractive advertisement without looking carefully at all the aspects of the loan. All borrowers should know that just because something looks and sounds good does not mean that it will be good for everybody. The saying goes, "all that glitters is not gold!" So, search carefully and look well before you leap. Do not forget to negotiate and negotiate hard with the lender.
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