“The rich rules over the poor, and the borrower is the slave of the lender.” – Proverbs 22:7
Three basic human needs — food, clothing, and shelter. What is so common about these three? They are fundamentally equal in terms of value and importance. It is extremely critical to have one of them missing. In other words, these three go together; nothing can be left out to be able to have the so-called “decent” living.
Shelter, as we all know, is a place where we live either temporarily or permanently to protect us from any danger such as calamities or anything that is harmful. I mentioned temporarily because many are still renting. But in case of permanent, it is understood that it is something owned (either paid in full or under mortgage). And speaking of mortgage, it means expenditure, payment, or cost which is cut out from one’s customary budget being usually the largest debt you’ll ever be in upfront. For that reason, many are unable to afford housing or taking mortgage for that matter because having one would lead to tighter funds, making it more challenging to sustain other basic needs.
If you are considering buying your dream house, here are some of my practical tips to save money on mortgage payments and other related expenses and fees, as follows:
- Identify your financial capability to pay. Never have to rush things if unable to commit with something that you’ll end up losing. Examine your financial capacity to major obligations such as mortgage payments before jumping into it.
- Always compare interest rates. It does not harm to look around for the best deal. Scout for the lowest rate you can ever get. Rates can be obtained either online, phone, or email subscription from various sources of mortgage providers. You may also choose to go to your own financial institutions/banks to haggle rates.
- Bundle up. Banks, cooperatives, and other financial institutions would always love to have customers to serve. They’ll do their best efforts to win your business and your loyalty. Choosing to bundle up products with them will enable you to get lower interest rates because they value you as their loyal client/customer.
- Go for variable rates against fixed. As per my own experience, variable rate gives me more space to breathe for a couple of reasons. First, I can take advantage of better rates because variable is often lower than fixed. Second, I can choose to convert it to fixed as I please, especially when rates fluctuate. Fixed rates don’t let you convert to variable. Fixed stays as is until your next contract renewal unless you change mortgage provider, but there are huge penalties for breach of contract or by not finishing the signed agreement. CAUTION: If you deem fixed rates are reasonable enough to secure you for a certain number of years, you are always free to decide what’s best for you and your needs.
- Commit to prepayment options. Because you know that mortgage payments are going to be continuously drafted from your bank accounts, choose the prepayment options to prevent you from paying penalties or huge charges in case you have forgotten to pay on your own. Set a personal reminder about the payments.
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