How to pay less when you start with your mortgage?
Your mortgage loan has been accepted and you are all set to make one of the most important decisions of your life: buying a home.
However, if we add together the expenses of the taxes paid for the acquisition of your new home, the notary, the registry, the broker and now the mortgage, it can represent up to 30% of the value of your home. This is a big investment that is made the first year at the time of buying a home, which can cause solvency problems in the family.
If you want to know how to pay less when you start with your mortgage then continue reading:
Tips to pay less when you start with mortgage
If you do not have the possibility of relying on a financial advisor, it is important that when acquiring a mortgage you read the fine print very well. You should pay close attention to the terms and conditions of the financial institution you have chosen so that you can make the best decision for your pocket.
Here are 4 tips we offer you to pay less when you start your mortgage and to be able to restore yourself economically during the first years of this important loan:
1. Don’t accept processing fees
The study commission is processed when the chosen bank carries out a solvency study for the client in order to find out if he/she is capable of assuming the loan.
In turn, the origination fee is the payment made to compensate the bank for the administrative costs of processing the mortgage.
These commissions can represent up to 1% of the total value of the loan, so it is a great saving to avoid them. However, don’t say no to them right off the bat, as they may have features that will benefit you. It is best to negotiate with the bank.
2. Request an initial grace period
In order to gain more flexibility at the time of payment you can request an initial grace period. This way you will only pay interest and will not amortize capital. There are two types:
- Partial grace period: Where you do not pay the principal of the loan, only the interest.
- Total grace period: During the time that the grace period lasts you will not have to pay neither capital nor interest to the bank.
Applying it during the first years will allow you to pay less when you start with your mortgage and thus replenish your savings and establish yourself economically.
Check out: Why hire a mortgage broker
3. Compare your obligatory expenses
Since the notary and appraisal fees are your responsibility, it is best to evaluate different options before choosing one. This way you will be able to make a better decision and choose the one that offers you a good price and gives you confidence.
4. Long repayment terms
Some banks issue mortgages with really long maturities, between 15 and 30 years, which means a lower monthly payment and easier to pay.
However, this brings with it higher interest rates, the longer the amortization period, the higher the interest you will have to pay for the mortgage loan.
I am Nikesh Mehta, owner and writer of this site.
I’m an analytics and digital marketing professional and also love writing on finance and technology industry during my spare time. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected] or LinkedIn profile.