How to Save Money on Your Mortgage Repayments
A Good Credit Rating, Home Equity and Lower Mortgage Interest Rates
Feb 3, 2009
In these difficult economic times, finding ways to save money on mortgage repayments is very important. A good credit rating and sufficient home equity are key to securing lower mortgage interest rates and reducing mortgage repayments. Although an additional mortgage fee, using the services of a mortgage broker can really help to minimise monthly mortgage repayments.
A Good Credit Rating and Lower Mortgage Repayments
Borrowers with a good credit rating will be able to get the best mortgage deals, secure lower mortgage interest rates and minimise mortgage repayments. People with a good credit rating and free of money problems present the lowest risk to lenders in terms of loan default so it is natural that they are the ones that are offered the lowest mortgage rates and more affordable mortgage repayments.
A borrower can lose their good credit rating very easily should money problems set in. A single missed or late payment can destroy a good credit rating. Having bad credit restricts the range of mortgage products available, pushes up mortgage interest rates and this will only serve to increase mortgage repayments substantially.
In order to minimise mortgage repayments, always try to avoid getting into money problems by making unnecessary purchases. Money problems set in when a borrower is over-extended financially. Close down obsolete borrowing sources, pay personal loans and credit card debt on time, minimise credit applications and get on the electoral register. This is the key to a good credit rating and lower mortgage repayments.
Bad Credit, Mortgage Brokers and Minimising Mortgage Repayments
Whilst an independent mortgage broker can add as much as 1% to the cost of a mortgage, a mortgage broker has the ability to trawl the entire market for the best deal. This ensures that a borrower with bad credit locks-in at the lowest mortgage interest rate and reduces mortgage repayments. Try to avoid tied mortgage brokers as they can only advise on a very limited product range.
Lower Mortgage Repayments and Home Equity
First-time buyers that have a higher house deposit, or home equity, are able to choose from a wider array of products and benefit from lower mortgage interest rates. It, therefore, makes sense that those seeking a remortgage with a higher percentage of home equity will benefit from lower mortgage interest rates and mortgage repayments.
The current problem is that, in these difficult economic times, an increasing number of people have been affected by negative equity. A negative equity problem makes getting a remortgage impossible. Negative equity mortgages used to be widely available, but they will not return until the property market recovers due to the risk of loan default.
Disposable Income and Lower Mortgage Repayments
Having a lower debt to income ratio or high disposable income will make a borrower a more attractive proposition to a lender. Whilst self certification mortgages are still available to those with sufficient home equity, virtually all banks will scrutinise finances for signs of money problems before offering a borrower the best mortgage interest rates and lowest mortgage repayments.
Having sufficient home equity and a good credit rating are the main factors a lender will assess before offering a borrower it's lowest mortgage interest rates. Those with bad credit are advised to go through a mortgage broker as they regularly have industry contacts that are able to secure borrowers lower mortgage repayments.
Those who found this article useful may also wish to read about Fixed Rate Mortgages - Pros and Cons and Standard Variable Rate Mortgages - Pros and Cons.
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