Take control, save money

When most people take a mortgage, they give up control. This somewhat makes sense. You are borrowing a large amount of money from a bank or lending institution and do have to follow their rules, to an extent.

But having some control over your mortgage has huge financial implications.

Let’s have a look at what you don’t really have control over:

The minimum repayment. Be it weekly, fortnightly or monthly, you have to pay this or risk the lender selling your house. The interest rate. While you may get a selection of interest rates, they are determined by the lender. There may be a slight room for negotiation but in the end it is only a choice of options presented to you. The bank’s hold on your house. While you are borrowing money your house has the lender registered as having an interest in the property. The amount borrowed. This is set at the time the mortgage is taken out. With so much in your bank’s control it is easy to accept and just make the mortgage payments as scheduled. However, in doing this you will forgo what you are able to control. The interest cost. This can be reduced, at no cost to you, with the right loan structure. Up to twothirds of your total mortgage payments can be interest. Small changes, especially early on, can save you thousands if not hundreds of thousands in interest.

Extra repayments. With the right loan structure you will be able to pay above the minimum repayment. A few extra dollars a week will save you tens of thousands in interest, plus take years off your home loan. The length of your mortgage. Most people will get a mortgage with a 25 or 30-year term and if you stick to the minimum repayments this will be how long you have the mortgage for. However, by reducing the interest cost and making extra repayments, you will start reducing how long you will have the mortgage for.