7 Ways to Save Money on Your Mortgage
posted in Mortgage News
Mortgages are a significant investment, so wouldn’t it be great if there was a legitimate way to save money on it? Well, luckily there’s more than one way to save money on your mortgage, in fact, there are 7!
- 1. Switch to a lower rate
By working with a mortgage broker, you can find out whether you might be able to get a better rate when your mortgage renewal period is up. You might also be able to move from a higher fixed rate to a lower variable rate, but it’s important to discuss this in detail with a mortgage professional since it doesn’t come without a certain risk.
- 2. Go for a conventional mortgage
Adding to your down payment to increase it to at least 20% of the home’s price, means that you can apply for a conventional mortgage and reduce your monthly payments, along with extending your loan length if required. Conventional mortgages also don’t require mortgage default insurance.
- 3. Lower your payments by extending your amortization
On a mortgage purchase, with a conventional mortgage you may be eligible for a 30-year amortization, compared to high-ratio mortgages which require a standard 25-year amortization.
When renewing a mortgage, you may be able to extend your amortization back to your original time.
Alternatively, if you had a high-ratio mortgage with a 25-year amortization and have paid enough down to bring your Loan-to-Value (LTV) to 80% or less, you might be able to qualify for a 30-year amortization.
If you can extend your amortization, it will take you longer to pay your mortgage off, but it could give you access to more cash in the here and now.
- 4. Save on other debt
Consolidating your loans is a great way to have one mortgage payment at a lower rate; saving you money on interest and giving you more freedom with your budget, however, you must avoid running up those debts again and focus on paying your mortgage off.
- 5. Increase the frequency of your mortgage payments
If your budget allows for it, consider increasing the frequency of your monthly payments to save money on interest and get your mortgage paid off quicker.
- 6. Decrease your amortization
Shortening your loan time does increase your monthly mortgage payment, but it means that you’ll pay off your mortgage quicker and save money on interest.
- 7. Co-habit, co-mortgage
If you can’t afford a home and a mortgage on your own, it might be worth considering multigenerational or co-ownership of a home to share with family or friends. Pooling resources might get you a better home, but as you can imagine, this doesn’t come without risks and a formal contract must be drawn up between the relevant parties.
For more ideas on how to save money on your mortgage, consider scheduling a consultation with an experienced mortgage broker or financial advisor.