Monday, 17 December 2012

Mortgage repayment tips - part 1

The total amount you will pay over the life of your mortgage is a function of:
  • The amount borrowed
  • The interest rate
  • The loan term
  • Any fees and charges applied by the lender along the way
So my tips on how to lower your total mortgage repayments logically fall into five categories:
  • Borrow less upfront
  • Negotiate the lowest possible interest rate
  • Minimise the contracted loan term
  • Make extra repayments
  • Eliminate (or at least manage) fees and charges
I’ve cover each of these over the next five days.

Today’s topic is “Borrow less upfront.”

As I highlighted earlier in the month, it is in the interests of lenders and brokers for you to borrow as much as possible:

However, the lower the loan amount you agree to, the more money you will be able to pump into the account from your savings from Day 1.  This will immediately reduce your principal and hence ongoing interest payments.