Mortgages are essential – where else are you going to find that amount of cash so quickly? However, they are also very expensive. The problem is that most buyers can’t afford to invest in a property without one, which puts them in a tight situation. The only way to make it better is to find a way to make the payments cheaper. Thankfully, there are several ways you can make your mortgage cheaper. All you have to do is learn a few tricks of the trade.
To make your life easier here is a selection of those tricks that may come in handy in the future.
Ask Your Lender For Help
The first thing you need to do is make sure that your lender knows you are in financial difficulty. If they don’t know, there is no way that they can help your situation. Banks and money lenders do have a bad reputation, yet that reputation isn’t always truthful. It is important to note that they are not soulless corporations out to make you homeless. In fact, it is in their interest to make the payments more viable for you. Otherwise, they could lose money if you can’t afford to pay.
Switch To A Cheaper Deal
It is possible that the mortgage you have isn’t the best deal for you and your financial situation. If that is the case, you should switch to one that is good for you. And yes, you can switch. All you need to do is ask your bank for permission. Although they may lose money in the process, they should accept the switch because it is safer from their point of view. Plus, you will have to pay a surcharge that will make up for some of the money.
Cash Out On Your Equity
Properties tend to have equity that you can use to your advantage. Equity is the extra value that you home has because of certain changes. For example, the house price may have risen in the past couple of years. Or, you may have made renovations that bump up the value. Regardless of where the money has come from, you want to exploit it. Ask your lender to cash out some of your equity and take it off the overall total. You can find out more about the process at http://www.calmtg.com/refinance/cash-out-refinance. In layman’s terms, the mortgage payments should decrease if the cost of the loan decreases. You will lose the money, but it is a good trade if you are struggling to make ends meet.
Cut Down Your Monthly Payments
You could ask them also to cut down your monthly payments when you are in a rough patch. The terms go something like this: you pay less until you are over the hump, and then you increase the premiums to make up for the lost cash. In many respects, this is just a payment plan that can help you while you don’t have the money to pay for your mortgage. As long as you can cover the extra costs when the rate increases, this is a legitimate option.
Fixed Rate Over Variable Rate
Fixed rates stay the same all the way through the contract while variable rates change depending on the market. So, how is a fixed rate mortgage cheaper? They tend to be cheaper because variable rate mortgages fluctuate wildly. Although you may be paying a lot less at this point, you may have to pay a lot more in the future. As an average, you will pay more over the course of your term with a variable rate. A fixed rate stays the same all the way through. At least with a fixed rate mortgage, you don’t have to worry about paying extra.
Go Long-Term
Again, why would you go long-term when you can go short-term? The answer is simple: short-term deals are worth lot more than long-term deals. Yes, the overall price may be a lot more with a long-term mortgage. However, the monthly premiums are smaller, which means you can afford them over the length of the contract. The short-term premiums are high higher, and that is a problem if you don’t have the cash. Plus, a long-term agreement tends to be cheaper because you are fixed into the deal instead of negotiating new deals. If you have to negotiate a new deal, the price can go from one extreme to another.
Pay Off A Big Chun
Okay, not everyone can pay off a big chunk of their mortgage. Still, that doesn’t mean you shouldn’t keep it in mind for the future. If you do come into a large sum of money, you should use that money wisely. By cutting the amount you owe, you will drastically cut the amount you have to pay each month. The dream is to pay it all off in one go so that there are no more monthly repayments. If that scenario every pops up, grab it with both hands. Take a look at www.bankrate.com to figure out how to pay off your mortgage early.
Sell Your House
A drastic move is to sell your house. By selling your house, you can pay off the entire mortgage. Then, when you buy a new house, you can go for a smaller one. There are not many ways you can get out of your mortgage without paying it off in full. And, there are also not too many possessions you can sell that will cover the whole amount. Your house is one such way and one such item that will allow you to get out of the deal. If you have any other possessions that are valuable, you can sell them too.
Overpay
The final option you may want to consider is to overpay. Instead of paying off the mortgage in one big chunk, you pay it off over time. As you may be able to guess, the more you overpay now, the less you will have to pay off in the future. This method is dependent on the money at your disposal, so consider it carefully.
Don’t let your debt build up until it becomes a problem. Deal with it before it escalates out of control.