Buying a home with a mortgage is the most expensive financial decision most people will ever make. Unfortunately, there are plenty of homeowners who pay far more than they have to. TheMortgageBroker says it doesn’t have to be this way. If you are in the market for a new mortgage, implementing just a few critical strategies can help you save thousands.
Use a Mortgage Broker
At the very top of the list is using a mortgage broker rather than going straight to a bank or building society. Mortgage brokers are professionals who know the mortgage industry inside and out. It is in their best interests to secure the best possible deal as doing so makes you a happy customer.
The thing about banks and building societies is that their mortgage offerings are limited. They have what they have, and you are not going to get a better deal than what is already on the table. A mortgage broker represents multiple lenders – both high street banks and third-party lenders – which opens up a much larger range of possibilities.
You should also know that mortgage brokers often have access to ‘broker-only’ deals you will never find at a bank. These deals are offered by non-bank financial services providers. Such lenders are typically private lenders whose finances are derived from investors rather than retail depositors. The fact that they are not lending depositor funds gives them more flexibility for offering attractive mortgage deals.
Shop Around for Deals
Whether you use a mortgage broker or not, you should shop around for your next mortgage deal in the same way you would insurance, energy, or broadband. According to This Is Money, a sizeable number of Brits are paying too much for their mortgages because they didn’t take the time to shop around.
The reality is that lenders will compete for your business if you force them to. The only way to force them is to do some shopping. So choose a few lenders and see what they have on offer. It will only cost you your time. Should you find two or three lenders you would like to do business with, you can always play them off one another. Make each one of them prove that it is worthy of your business.
Note that even one-half of one percentage point could be worth thousands over the life of a mortgage. So don’t discount what might seem like a minor difference. Aim for the best possible terms and conditions you can get, along with the best interest rates and the lowest charges.
Be Always Ready to Find a New Deal
Hand-in-hand with shopping around is being prepared to move when necessary. As just one example, lenders routinely offer introductory deals as a means of attracting new business. These are deals that offer comparatively low interest rates and limited fees and charges. But because they are introductory by design, the low rates do not last.
Being prepared to move means recognising that an introductory rate is a short-term rate only. Let’s say your deal’s introductory term is two years. Your rates and monthly payments will shoot up the minute the introductory period has expired. Start looking for a new deal with 3 to 6 months remaining on your current deal.
Your lender is counting on you forgetting about the introductory period until a month after it expires. By the time you are ready to make the next payment, it’s too late. You do not have to let that happen to you. Stay on top of any introductory deal you get and be prepared to move when the time comes. Who knows? Being prepared may motivate your lender to offer you something better just to keep your business.
Put Down As Much As You Can
The biggest expense of any mortgage is also the biggest source of profit for the lender: interest. The amount of interest paid on a loan can be reduced by two things: the amount borrowed and the length of the loan’s term. Common sense dictates that you can save a lot by borrowing less and paying it back quicker.
What’s the best way to facilitate this? Putting a down payment of as much as you can. If you can make a down payment of 25%, that’s good. If you can save 35% for your down payment, that is even better. The bigger your down payment, the less money you will be borrowing. The less money you borrow, the more quickly you will be able to pay it back.
There is no getting around the fact that mortgages are expensive. But do not pay more than you have to. If you are willing to put in the time and effort into saving a sizeable down payment, shopping around, and being prepared to move when an introductory offer ends, you can save thousands. And if you are willing to work with a mortgage broker rather than going directly to a bank or building society, you will be in the best position possible to save.
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