- February 24, 2019
- Posted by: Ethica Private Wealth
- Category: Blog
Securing a mortgage on your dream home can be difficult. A lot of people believe that once you have the mortgage secured, the rest will take care of itself. Whilst this may be true, managing a mortgage properly in order to protect your credit rating and minimise the number of years it takes to pay is really important. In this article, we’ll give you 7 tips for first-time buyers that will help you to stay on top of your mortgage and manage it in a way that makes it more effective and affordable.
1. Keep Up With Payments
Whilst it may seem obvious, keeping up with the payments on your mortgage is a must if you don’t want to find yourself in a difficult financial situation. Missing payments and being late on payments will have an effect on your credit score which may make it harder for you to get another mortgage or secure other lines of credit in the future.
If you want to ensure that you pay on time every time, be sure to set up a payment schedule in which the company takes the payments straight from your bank account. The best date to choose is one that is just after your monthly payday, as this will mean you will always have funds available and you won’t accidentally spend too much before the payment has been taken.
2. Pay More Whenever Possible
If you’re keen to be mortgage-free as soon as possible, its a really good idea to make extra payments whenever you can. When you take out a mortgage, you will likely be assigned to a monthly payment plan, but you’re free to make extra payments whenever you like.
If you’d prefer, you can also get a bi-weekly payment schedule. This is beneficial as over the course of a year, you’ll actually end up making 26 half payments, which is equivalent to 13 months worth of payments. On a regular monthly plan, you’d only pay 12. Taking this option will ensure that you pay at least one extra monthly payment every year, which will help you to pay your mortgage faster and reduce the interest over the lifetime of the loan.
Read More: 4 Ways To Pay Off Your Mortgage Faster
3. Look Out For Refinancing Options
If you have been paying your mortgage for a while and the market has changed since you bought your home, you may be able to remortgage in order to secure a better interest rate for the duration of the loan. This can also be a way of freeing up your home’s equity to use as an investment in another project.
When it comes to remortgaging, make sure you have done you’re calculations correctly and you are happy with everything before you proceed, as you don’t want to end up losing money.
There are also some remortgaging scams in operation, so it’s a good idea to be wary and question everything. If you think you may have found a good remortgaging option, but you’re not sure, getting the help of a financial advisor could ensure you’re making the right decision.
Read More: It’s Time To Hire A Financial Advisor When…
4. Sell at the Right Time
Although a mortgage is usually a very long commitment, many people are keen to sell up and move into a different house just a few years after they secure their first mortgage.
However, fluctuations in the housing market mean that your house could be worth less at certain times than when you bought it. In some cases, this is unavoidable, but if you do find yourself in this situation, it could be a better idea to rent your current property instead of selling it, so you don’t end up losing money when you sell the house.
A lot of the time, house prices will rise again and you will be able to sell your home at a more opportune time, so that you break even or in some cases, make a profit.
5. Stay in Touch With Your Mortgage Company
Sometimes, when people take out a mortgage they may feel as though there is no flexibility in the payment schedule.
However, like other businesses, mortgage lenders are aware that people’s circumstances can change and that they may need to re-evaluate their payments. In these cases, mortgage companies may be able to offer a break in payments to help you to free up some cash and get back on your feet.
If you feel like you’re struggling to keep up with your payments and need a break, don’t be afraid of calling up the company and discussing your issues with them. In most cases, they will be happy to help and advise you on the best course of action to take to improve the situation.
6. Don’t Avoid Arrears
If you are having trouble managing your money and you are worried about falling into arrears on your mortgage, the best thing to do is to seek out help and advice as soon as possible. This can be help from a financial advisor or from your mortgage company. The longer you leave arrears to stack up, the harder it will be to fix the problem when you have to, so do your best to confront the problem head-on, as this is likely to minimise the financial damage you sustain.
7. Reassess Your Other Homeowner Bills Regularly.
Whilst this tip is not strictly related to mortgages, it can help you to free up cash and make extra payments towards it. Sometimes, your bills such as home insurance, utilities and tax could be higher than they need to be. If you check these out once a year and ensure that you aren’t paying too much, you may be able to save money and redirect it into your mortgage fund.
Mortgages can seem complicated, but they don’t have to be stressful
Although mortgages can feel like a very big, very expensive commitment, proper management can make them easy to keep track of and simple to pay off.
If you’re in need of advice about ways to improve your mortgage management and save money, Ethica Private Wealth Specialists may be able to assist you with a 2 Hour Free Consultation to discuss the best actions to take.