Blog by Andrew Peck

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Get the Best Mortgage Possible by Following These Six Steps

Get the Best Mortgage Possible by Following These Six Steps

If you’re a first-time buyer or you’re training up to a larger space or refinancing your home, saving money on your mortgage lets you get ahead financially. Here are seven ways to cut your mortgage costs.

1. Get the Best Possible Rate.

You may have to shop around. Phone a mortgage broker (that has been referred from family friends or colleagues) or get phoning yourself. Just by asking for a better rate, you can often get a significant discount off the posted rate. Even half a percentage point will save you not just monthly, but over the life of the mortgage. Negotiate and be prepared to walk away until you find a rate you can live with.

2. Make the Biggest Down Payment.

The larger your down payment, the less your mortgage payments. If you’re thinking about buying your first home, let relatives and friends know – particularly if your birthday or a holiday is coming up. Start a down payment account and instead of gifts, ask for down payment donations.

3. Get a Shorter Amortization Period.

If you shorten the loan repayment period, for example, to 20 years from 25 years, you will pay off your mortgage quicker. Your payments will be larger, but you will pay far less over the life of your mortgage in interest.

4. Get a Prepayment Option.

Make sure you have a prepayment option written into your mortgage contract so you can make balloon payments at specific times. This lets you pay part of your mortgage principal before it’s due. You’ll build equity and save on interest. Beware: restrictions often apply and can include a penalty.

5. Make More Frequent Payments.

Make bi-weekly payments and you’ll make 26 payments each year or 13 months of mortgage payments instead of 12 monthly payments. If your mortgage is 25 years, paying an extra payment reduced the amortization period to 23 years.

6. Watch Those Costs and Fees.

When you arrange your mortgage, lenders may charge application, appraisal and legal fees, which quickly add to your costs. Find out which fees are negotiable and ask your lender to waive them. Chances are, they will counter with fewer fees.

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