So far we have looked at the amount of money that is paid out over the life of a home loan and how making a good sized down payment can help reduce the overall amount of money that is repaid to the bank or mortgage company. Now we will look at some other ways to save money on your mortgage.

Extra Monthly Payments Can Really Add Up

Another great way to save on the overall cost of your property mortgage is to put extra money towards your principal amount every month. Again we will use the figure of $400,000 and a 30 year loan with 5.0% interest. If you were able to put an extra $200.00 a month, only $50.00 a day, towards your loan repayment then you would end up paying off your loan in 25 years instead of 30 years and save over $74,000. While the extra amount may seem small at the outset, as you can see it really adds up to a significant savings over time.

Other Payments Can Scale Things Down As Well

Just like the extra monthly payments can add up, bulk sums can also be beneficial to reducing the time left on your mortgage as well as the overall amount of money that you pay on it.

• If you get a bonus from work each year, try to set that aside to go towards your mortgage. Putting an extra $3,000 a year toward your mortgage every year will enable you to pay off the balance in 24 years instead of 30 and will save you over $91,000.

• Another great way to pay down your mortgage and save money over the life of the loan is to make a one time bulk payments. This would work well if you got an inheritance or suddenly came into some unexpected money. A bulk payment of $15,000 would save you over $41,000 over the life of the mortgage. So if you took your one time lump sum and applied it to your mortgage instead of buying new furniture or going on vacation, it would save you a lot of extra money.

Property Options Australia
Property Options Blog © 2006 - 2009

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When you are getting a mortgage loan it is important to have as much information as possible and to be prepared in every way that you can be. In light of that we will continue with our series on addressing common mortgage issues.

A Fixed Rate Is Not Always The Best Way To Go

Home loans are as individual as the people who get them. Your home loan needs will differ greatly from what your neighbors needs are. The decision to get a fixed-rate loan or a variable loan is one that needs to be carefully considered and all the options need to be weighed. Many people have begun to have the mentality that fixed rates are the best and that variable rates should be avoided like the plague. This is not true. Fixed rates are calculated by capital markets over the period for which you agree to be it three, five, seven, ten, or even twenty years. You will be locked into that payment fee throughout the life of the loan. If the variable interest rate goes down during that time you will still have to pay whatever the rate is that you signed on for. So you could in fact end up paying more for a fixed interest rate if the rate goes down. This of course goes both ways and if the interest rate goes up and you have a variable interest loan then you will of course be paying more. Really the best advice is to look over all the facts and figures and determine which rate will work best for you and your family.

You Can Not Add Personal Debt To Your Home Loan

Many new home buyers would like to be able to add in all of their personal debt such as car payments, student loans, credit card bills and other outstanding bills into their home loan and have one lump sum to worry about. In theory it sounds pretty good. Just one payment to worry about each month. But in most instances this can not be done. Most of the time the property needs to build some equity before something like this can happen. After some equity has accumulated on the property all the debt can be rolled in together if you so choose.

Sean Rasmussen
Property Options Australia
Property Options Blog © 2006 - 2008

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