A high mortgage repayment can account for a large majority of your income, leaving you with very little to cover the rest of your regular living expenses each month. We recommend that you keep your mortgage repayments to 30% of your take home income [or lower] so you won’t feel a financial strain each month.
We may be able to help you lower your mortgage payments each month. Get in touch and find out how!
Do you feel like your monthly mortgage is too high? We’ve got 4 ways that may help you reduce your monthly mortgage repayments:
1. Refinance Your Mortgage
If you do choose to refinance your mortgage, it is one of the best ways to help ensure you lower your mortgage payment and your interest rate so you can pay less in interest over the life of your loan. You must have good credit to refinance, but you can utilise a refinance calculator to estimate how much you can save and how your mortgage payment would be decreased by.
2. Make a Larger Down Payment
If you are still in the market for a home, consider putting a large down payment down in order to keep your monthly mortgage low. While it’s best to put at least 20 percent down, if you aren’t in an immediate hurry to buy, see if you can set aside even more.
The more you put down on your home, the lower your mortgage will be. And if you put at least 20 percent down, you won’t have to pay private mortgage insurance which will save you quite a bit of money as well.
3. Make Extra Payments Toward the Principle
If you’d rather see your mortgage payments decrease later instead of instantly, you should actually consider making extra payments on your mortgage each month. Like with all debt that has an interest rate, the more you put toward the principal balance, the sooner you pay the debt off and in the meantime, your extra payments can help reduce what you owe in the future.
Making extra payments isn’t always easy, but if you have a dual-income household, or receive any gift money or bonuses at work, you can certainly try to achieve that goal.
4. Choose an Interest-Only Mortgage
When you get a mortgage, some lenders don’t require you to begin paying off your balance right away and will offer you an interest-only loan. Interest-only (I/O) mortgages occur in two stages: the first phase, where you only pay the interest on your mortgage and the second phase, where you pay off the actual principal balance plus interest.
If you have a 30-year mortgage and spend the first five years paying only interest, your monthly payment may seem pretty low, but you must pay off the rest of your mortgage in the remaining 25 years. I/O mortgages are a temporary way to lower your mortgage payments and can work out as long as you plan to increase your payments after the interest only phase is up.