Purchasing a home is no small decision and must be carefully thought out and planned for before you sign on the dotted line of that mortgage contract. It’s a good idea to have a financial advisor like Andep to help you with the financial planning needed to get the best deal and work out ways to save on the cost of purchasing a home.
One easy way to save money that any financial planner will tell you about is to save up a larger than normal deposit. Not only will you save on interest because there will be less principal to pay off, you’ll get a better deal and not be forced to pay for the lender’s mortgage insurance. This insurance is to protect the lender from the risk of loss if you should default on the loan for some reason.
Much of the cost of a mortgage is the interest, but some of it is in the fees and charges you have to pay to set it all up. It’s important to ensure you get the right kind of loan; one that does not charge you a fee when you make extra repayments, or worse still, prevent you from making extra repayments. It is in making extra repayments that you can save a whole heap of interest, so the lender may not be happy about that.
Having a loan that can be used with an off-set account or a re-draw facility can also save a great deal of interest. However, some of these limit the amount you can put in or redraw, so it’s a good idea to look carefully at what you get versus what extra you have to pay. For instance, there could be a monthly fee for such an account.
It’s important to understand fully the different kinds of loans available and what specific advantages and disadvantages each one has before making a choice. Many lenders push one product over another because it is better for them, not for you. They – naturally enough – want to make the most out of the money they lend you.
You might wonder then, whether there is any use in all the effort required to choose the best product. Won’t the lender simply not lend you anything that doesn’t benefit them the most? Not necessarily. There are many lenders out there and people who need money are able to do the comparisons easily these days using their computer and online connection.
This makes the mortgage scene very competitive. Lenders that don’t deal fairly with their customers will soon find out that they’ve lost them to other lenders – their competitors. Since they need to make money by lending it, they also need to keep customers so are more likely to offer a variety of products, even those that they may not make quite so much from.