By Andrew Curtis
A mortgage is the biggest loan you’ll ever take out. There are several ways
in which you can reduce costs up front and in the long run in order to
make things more affordable. Here are just five of the best ways to save money on a mortgage.
Prepare your personal finances
Being in a good financial position will not just increase your chances of
being accepted by a lender, but it will also allow you to access better
deals. You should try to keep a clean financial record for the six months
before applying to a mortgage - your statements should show proof of a
stable income, few cases of unnecessary borrowing and evidence that you earn
more than you spend. Having a good credit score is also important - this can
be achieved by consistently paying bills on time. Don’t be afraid to spend
six months to a year improving your financial health if your credit score
isn’t great and your spending habits don’t look good.
Place down the largest down payment that you can
The higher the down payment that you offer, the less you’ll pay in the long
run. On top of being able to pay cheaper monthly rates, you’ll pay less
interest overall. If you’ve saved up a 5% down payment, consider whether you
can turn that into a 10% down payment by waiting it out a little longer and
saving a little harder.
Use a mortgage calculator
Mortgage calculators can give you a more accurate idea of how much you’re
likely to spend in the long run. When shopping around for mortgages, they
can be a useful tool for helping you to budget. You can find mortgage
calculators online at sites like MortgageCalculator.org. You can use
property listings and free mortgage estimates to calculate the costs (you
don’t have to wait until you’ve got a property lined up and a mortgage
valuation as by then you’ll already be fairly committed).
Use a mortgage broker
Mortgage brokers can help you to shop for the best deals. They often have
access to exclusive deals that you won’t find on the market. They can also
offer advice and help with the application process. Using a broker will
involve paying extra fees, however you’ll usually make up these costs in
mortgage savings, providing that you choose a reputable broker (always spend
time reading reviews of brokers to ensure that you choose a reliable one).
Look into home buyer programs
There are home buyer programs out there available to first time buyers that
can help to reduce many of the upfront costs. These are worth looking into
and taking advantage of. This guide at Forbes.com lists a few of the special
loans and financial assistance programs that are out there. It’s worth
noting that individual states and even individual cities have their own
programs in place - these could involve contributing some money towards your
down payment savings or allowing you access much lower down payments.
