Searching for a mortgage can be a bit of a nightmare, especially if you are a first-time buyer. There are a lot of confusing terms that you might not understand and there are so many different deals that it’s tough to know which one is best. But if you are not careful, you could end up making the wrong decision and wasting a lot of money for years to come. However, there are some simple things that you can do to make sure that you get the best possible deal. Try these mortgage tricks to reduce the amount that you have to pay back.
Pay A Larger Deposit
Getting the money together for a deposit is so tough and when you finally have enough to qualify for a mortgage, you will probably be very excited about buying a house. But if you want to save money, you should consider holding off for another year or two. If you pay the smallest possible deposit that allows you to get a mortgage, your monthly payments will be a lot higher. However, if you pay more upfront, your monthly payment will be far more manageable, which is why putting down a larger deposit is one of the best ways to pay your mortgage off faster. Consider whether you can stay in your current situation for another year or two and save up some more money. Even though you are itching to get into your own house, it could benefit you in the long run. You’ll get much better rates with a later deposit.
Split Your Mortgage
When getting a mortgage, you need to decide between fixed-rate or variable interest. Fixed-rate can be a good option because it can help you budget your monthly expenditure and your interest rate can’t go up, but if interest rates fall, you won’t benefit and you will carry on paying the same amount. Variable interest mortgages do allow you to benefit from a drop in interest rates but there is always the risk that they will go up and you pay more. However, there is a third option; you can split your mortgage. When splitting your home loan, half of the interest is fixed while the other half is variable. This means that you benefit from both and reduce the risks involved with taking a fully variable mortgage. You don’t have to go for a 50/50 split either, you can divide it up however you like, so it’s completely flexible.
Avoid Unusual Properties
Mortgage lenders have to manage their own risk, which means that they want to be confident that they will be able to get their money back if you default on payments. That’s why they don’t like unusual properties because it will be harder for them to sell them on if they repossess them. Even though you might fall in love with an unusual property, think about how potential buyers will view it in the future and whether you might have trouble selling it on. If you go for a standard property that will be quick to sell, you will get a much better rate on your mortgage and you will have a lot more options.
These 3 simple tricks will help you get a much better mortgage and save a lot of money in the future.