Friday, September 28, 2012

24 Mortgage Tips and Tricks [13-24]

13. Stay informed – don’t forget about your mortgage
With any long-term commitment, there is always the temptation to let your mortgage roll
along, make your repayments as they fall due and think as little about it as possible. As long as you keep up the repayments, there’s not much else you need to do, right?

14. Get a cheap rate and invest the difference
When interest rates are low, like now, it is usually safe to say that inflation is also low. Thus, bricks and mortar may not be the best place to invest. Try getting the cheapest home loan you can find and make the minimum repayment. This allows you to use the extra cash to invest in other, more profitable areas.

15. Run an offset account
Instead of earning interest, any money you have in your offset account works to offset the
interest you are paying on your home loan. For example you may have a mortgage of
$300,000 at 7.07 percent and an offset account with $50,000 in it earning 3 percent.

16. Pay all your mortgage fees and charges up front
Some lenders allow you to add the amount you borrow instead of coming up with cash for
your upfront costs. While this can seem a blessing try to avoid doing this.

17. Pay your first installment before it’s due
With most new loans, the first installment may not become due for a month after settlement. If you can manage it (and your lender will let you), pay the first installment in the settlement date. If you do this, you will be one step ahead of the lender for the term of your loan. Every little bit counts.

18. Shop around and make sure your lender knows it
One of the most powerful tools you can have in the search for the best home loan is
information. Make sure you have rung half a dozen lenders and brokers (as well done some internet research) before you start talking to your preferred lender about getting a new loan or refinancing your existing loan.

19. Make sure your loan is portable
If there is any chance that you will move house during the course of your loan (and let’s face it, there is a strong chance), make sure that your lender will allow you to transfer your loan to a new property and that it won’t charge you the earth for the privilege.

20. Avoid bringing finance
Someone once said bringing finance is so called because it allows you to “pylon” the debt.
The joke’s appalling, but so is bringing the finance. Unless you get your timing right you could find yourself with two home loans at the same time – with the bringing finance element costing you an extra couple of percent premium on the standard variable rate.

21. Choose the loan that suits your needs
Choosing a loan is about knowing what you want. Draw up a table of potential home loans
and rank them. Make a list of all the features that are important to you and rank them
according to importance. Give each feature a score out of 5 – one for unimportant right
through 5 for indispensable.

22. Don’t be afraid of smaller lenders with cheap rates
Since the advent of the mortgage managers over the past five or six years there’s been a lot
of talk about smaller and “non-traditional lenders” and how they have forced interest rates
down. With the property boom, plenty of opportunities sprang up for smart lenders with low fees willing to take on traditional lenders and many have done very well indeed.

23. Find out if your profession will get you a discount
Some lenders offer discounts to specific professional groups or members of professional
organizations. Ask your lender if your occupation qualifies you for any discount. You might be pleasantly surprised.

24. Read all about it
Information is your greatest weapon against the mortgage monkey, which has taken up (or is about to take up), residence on your back. By staying informed about what is going on in the home loan market, you might be able to stay a step or two ahead of your lender. And if you can stay one step ahead, you are already on your way to paying of your mortgage faster.