Written by: Barry White
Okay, after what seems like a lifetime of waiting, the time is almost here for you to purchase and move into your dream home. All of the years of savings, the endless trips to the DIY store, the sweat, the tears, and hopefully no blood, will all soon have been very worth it.
But wait, not so fast. What about managing your home loan? Once you are theoretically approved for your home loan, the next step is managing it to ensure you comfortably stay afloat financially, without having to dig into your savings or live on the breadline, as it were. To make your life easier, and more financially fruitful, here are 5 super ways to manage your home loan.
Manage your funds
First and foremost, when taking out any loan, whether it be a mortgage, or simply a few Euros until payday from your friend, you need to ensure that you carefully manage your funds. You can of course use a mortgage calculator and do some basic sums on paper, but we want you to be very thorough. Make a note of every expense you normally incur, including things like food shopping, and online streaming on demand services. Make note of what typically comes in, versus what will be going out. If things may be tight, look at luxuries you can afford to cut back on and not miss out on. The better you are with your money, the easier your life will become.
Use a mortgage calculator
To really ensure that you know what you’re going to be spending on your mortgage, it is strongly recommended that you utilize a mortgage calculator. There are countless mortgage calculators available online that will give you a fairly-accurate idea of how much you may be entitled to borrow, and how much your monthly mortgage payments, including interest, will actually be. These tools are very useful because they will enable you to see which offers and deals may be best for you. You enter info regarding your expenses, debts, earnings, spending habits, and so on, and the mortgage calculator will then do the rest. Happy days.
Switch to a bank that charges a lower interest rate
This next tip is a no-brainer when it comes to managing your home loan and funds. When you borrow money from a bank, or any lender for that matter, they will charge you interest. The interest is how they make their money from you, otherwise lending you money is pointless as they get nothing back. The higher the interest rate, the more you pay them. Banks and lenders are now very competitive when it comes to interest rates, so the lower the interest rate, the less you will pay back. Find out how much your current bank charges in interest, and see if there are other banks out there that charge less. If there is, switch over to them as you will save money in the long run, plus your monthly payments will be lower as a result.
Pay an extra EMI each year
If you are able to do so, many financial experts recommend that you pay an extra EMI each year. An EMI is an Equated Monthly Installment and it is an awesome way to ensure that you can repay your mortgage/loan before the tenure ends for that specific home loan. Paying more may seem counterproductive, but when it comes to property, the thing to remember is that you are very much in it for the long run, so you must look at the bigger picture. Paying an extra EMI means that eventually you can reduce a significant number of months, or even years, from the loan period. Basically, it means that you can pay off your mortgage quicker.
Refinance the loan to reduce the burden
Finally, the last step we are going to be taking a look at today is refinancing the loan in order to reduce the financial burden on you. If for example, you were to discover that you could actually pay less each month if you were to switch to a lender that happens to be offering better, more competitive rates, it is very strongly recommended that you do exactly that. You see, lenders can lower, or increase, their rates seemingly at random, at varying intervals. This in turn means that you can actually save on interest payments, like we looked at earlier, if you switch to a lender offering better rates. The process is actually fairly straight forward, and as you will now be familiar with how it works, you’ll get through it much quicker, plus you’ll have a great incentive to do so because it means that, ultimately, you’re paying less each month so you have more to play around with.
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