Cut the cost of your mortgage

Here are some tips for trimming the cost of your mortgage from our partners at Mortgage Express. As a property owner, paying off your mortgage before you retire is important. Once you hit retirement age, the last thing you want is to still be saddled with debt. Here are some ways to help reduce your total mortgage and essentially help you pay less for your property.

Shorten your term Reducing your mortgage term to 25, 20 or even 15 years shaves thousands of dollars in interest off the total. Even reducing it by one year can save you money.

For example, if you borrow $500,000 at 4.00% interest over 30 years, your interest on a principal and interest loan amounts to $359,348*. Shorten your mortgage term to 25 years and you reduce your total interest to $291,755*. Of course, this means your regular repayments will increase, so make sure your budget can accommodate this or you’ll need to alter your spending habits.

Make additional payments If you can’t afford to shorten your mortgage term, keeping a portion of your mortgage on a variable rate or having a revolving credit mortgage, which works much like an overdraft, may be the answer.

Look out for refinancing deals Look for refinancing offers with more flexibility or a better interest rate. Be sure to factor in any costs for refinancing when considering this option.

It’s worthwhile reviewing your mortgage on an annual basis to ensure you’re getting the best deal. Your mortgage specialist can do a financial health check and help you find savings.

If interest rates drop, keep repayments at your current level, rather than be tempted to spend the savings. By doing this, you’ll shave off a substantial portion of your loan principal.

Each product provider has different policies and costs around paying extra amounts off your loan, so get in touch with your local mortgage Express adviser to find out more. You’ll find additional tips and tools at mortgage-express.co.nz/mortgages or call Jenny Cheevers, 027 244 6686

While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Mortgage Express Limited for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication.

*This is an indicative amount only based on the loan amount and interest rate selected. The calculations assume a constant interest rate for the life of the loan, however rates will change over this time and as such the calculations are a guide only. A Disclosure Statement is available on request and free of charge.

Thinking of Selling ? Give me a call or send me an email for a free no obligation chat. Every property is different and I will tailor make a marketing program that best suites your home/investment to achieve a premium price. 0275643112 or vinay.kumar@harcourts.co.nz.