Mortgage rates have been soaring compared to levels recorded before the COVID-19 pandemic, making it even more important for homeowners to be wise about their loans.
Fortunately, Quang Huynh, a Sydney-based mortgage broker, spilled four secrets that could help homeowners easily get a loan and pay it off quickly. Here are the tips, as listed by Yahoo Finance.
Consider Making Weekly Mortgage Payments
When homeowners are given a home loan, they are automatically put on a monthly payment scheme. Huynh recommended switching to weekly payments to shave off thousands from the principal amount owed on your mortgage. Switching to weekly repayments also greatly decreases the amount of interest that accrues on the remaining balance.
"If you [are] paid weekly rather than monthly, you can shave from four to five years off your mortgage, and you're paying the same amount of money," Huynh said. "This is because interest gets calculated daily, and [the] more often you pay, the less interest gets calculated when they charge you for total monthly repayments.
Shop for Rates
Banks offer a range of interest rates to its clients. However, Huynh said banks often only give lower interest rates to new clients than they do for established customers. This scheme is designed to serve as a drawcard for new customers to get them through the bank's doors.
Banks Look Through Your Expenses
Before applying for a home loan, Huynh suggests spending time scanning your bank statements and looking for any direct debits or transfers that seem questionable. This may include bank transfers and subscriptions to some websites such as OnlyFans. Regular transfers to your parents could also be seen as a regular living expense, which could "halt" loan applications.
Purchasing a Property With Someone Else May Complicate Loans
Individuals planning on purchasing real estate property with a sibling, parent, friend, or partner may find their loan process to be more complicated. This is because banks take into account 100% of the debts of all parties involved when working out how much they can lend you.
"This allows the new bank to only use 50 percent of the existing debt with your sibling or parent in factoring your new borrowing power rather than 100 percent for your next purchase with your spouse," Huynh said.
As such, Huynh recommends shopping around for rates and choosing a bank with policies that are less restrictive towards joint purchases.
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