Most homeowners dream of one day being able to pay off their home loan and live a life free from interest rates, home finance, and worrying about making their monthly mortgage payments. For most of us, our mortgage is the biggest expense we'll ever have, and each month, our home finance payments take a big bite out of our paychecks.
Think about what you could do with all the extra money you would have if you didn't have to pay your mortgage every month. Interested? Well, here are five things you could do right now to cut your mortgage payments and the total cost of your home loan by a large amount. You could also speed up the rate at which you pay off your loan so you can be free to live your life the way you want to sooner.
Step One - Demand Better Service!
As a good, long-term customer of your mortgage lender, isn't it about time you got something in return for your financial commitment, regular payments, and good behaviour?
Well, you can be sure that your mortgage lender won't do anything nice for you unless you ask for a better deal.
So pick up the phone and call your lender. Ask to speak to someone in customer service or the customer retention department and tell them you're looking for a better mortgage deal. Ask them to give you an estimate of how much you still owe so you can give it to any of the hundreds of other mortgage lenders out there who are all willing to give you a better deal.
If you really are a valued customer, your current lender should respond well to your requests and let you know about better deals they can give you right now.
Remember that if you don't ask for what you want, you won't get it.
Step Two: Compare prices.
If the first step doesn't get you the deal you want, look elsewhere. There are actually more than a hundred lenders out there who are all looking for new customers and will offer you perks if you take out a mortgage from them.
Use the Internet to find out what prices are being charged and what deals are available. Don't forget that lenders will do everything they can to make their deal look like the best one and do everything they can to get new customers, so you need to be smart.
Look for any hidden fees or "tie-in" clauses, and make sure you compare similar products by taking into account all the features of each mortgage offer.
Step 3: Send out the cavalry.
Well, not exactly the cavalry, but a licenced and regulated fee-free independent mortgage broker can help. In the UK, these companies are now regulated by the Financial Services Authority, and in the US, they should be covered by the Responsible Lending Act.
As independent brokers, they have access to and knowledge of every mortgage product available. They should be in the best position to help you find a better deal than the one you have now, where your payments are less, your interest rate is lower, and the amount you pay back over the life of your loan is less.
Make sure that the company you get a mortgage from will pay your broker and not charge you a fee. More importantly, make sure they have the right licences and regulations, and if you can, ask for professional references or testimonials.
Step Four: Get rid of everything else.
Mortgage lenders are known for selling expensive add-ons like life insurance, home insurance, contents insurance, and income protection cover. All of these insurances have their uses, but you can bet your bottom dollar that you can get all of them for a fraction of the price by going directly to an independent insurance house or even hiring an independent financial adviser to find you the best deal.
You could save a lot of money on your insurance premiums every year.
Step Five: Give it some money
So, you've lowered your interest rate, lowered your monthly payments, maybe gotten a lump sum of cash from a new lender, and saved thousands on insurance products. Put all of those savings back into your mortgage and pay it off early.
Make sure you negotiate into your new mortgage contract that you can make early payments or lump-sum annual top-ups to get rid of the millstone around your neck, get out of your biggest financial obligation as soon as possible, save thousands of dollars in interest payments, and enjoy life again.
