All good home loan advice should include information relating to keeping mortgage costs as low as possible – in fact this is an incredibly common search term for first time applicants. This is why we’ve decided to compile this article to offer help and guidance to those wishing to keep their repayments as low as possible, without sacrificing on how much they can borrow from a bank in the first place.
When applying for a loan on a home, it’s important to note that a lender will offer to cover up to 80% of the total sum (with the rest being paid for in the form of a deposit by the borrower). They will also add interest rates onto each repayment; all of which can be split into individual monthly payments that can be repaid over the course of 35 years (shorter or longer terms can be arranged).
So, how can you minimise the cost of your loan?
The first thing to do is consider putting more toward your initial deposit. Most banks will demand a minimum percentage (anywhere between 10% and 25% typically). Although they will propose set guidelines relating to the minimum amount, there’s no reason why an applicant couldn’t go over this sum if they can afford it.
The benefit is that the total amount that will need to be borrowed can be reduced; meaning that a borrower could shave hundreds of dollars a year off of their repayment schedule. Another great way to reduce the cost is by paying back more than what is owed each month. If you receive a bonus from work, if you inherit money, or if you come into cash in another way – rather than splashing out, you could always pay off a little more of your loan.
This will help to cut the total amount owed, which can often result in lower monthly repayments, as well as being able to reduce the duration that you will be expected to pay interest on your loan.