How to manage my mortgage

When you find attractive low rates offered by another lender, you can try switching to the new lender. However, you need to look into the exit fee charged by present mortgager. You also need to know how much the new mortgager will charge for arrangement, valuation and legal charges.

To compete with the “Best Buy” offers, some lenders keep interest rates low and jack up the arrangement fee. Whereas, some lenders claim to offer free valuation and legal fees but keep the interest, on higher side.

You have to take a call considering mortgage value, period of repayment and monthly pay off to choose between higher upfront and lower interest or lower upfront fee and higher interest. If your mortgage value is higher, it is better to choose higher upfront fee and lower interest rate.

Mortgage period

If you have smaller deposit, you should opt for a two year fixed term, instead of five years. As the property value appreciates, your equity stake will give you a better. Thus, you can re-mortgage with a fresh deal, at cheaper interest rate.

Find the best mortgage deal

The market has plenty of cheaper deals, but you should have the time and patience to study them and choose the right one for you. A mortgage broker plays a vital role in analyzing them and find the most suitable one for you.

Bi-monthly Payment Plans

You can choose to pay bimonthly, instead of paying once a month. When you pay 24 payments against 12, your total payment adds up to same total. You save on interest, as the lender credits your balance on the 15th and 30th of every month.

You should check if paying bi-monthly would be convenient to you. Though it helps to reduce the interest, its impact is quite small. For example, you can complete your mortgage by either one or half a term ahead.

Bi-weekly Payment Plans

Here, you pay half of the monthly amount, every two weeks. Thus, in a year, you pay 26 bi-weekly periods, instead of 24 bi-monthly periods. You end up paying off an extra monthly payment in a year. Though, the total monthly payment amount is same, you tend to reduce the period. However, there is no interest saving in this method, as payment is credited monthly

For example, a 30 year mortgage at 4%, if converted into bi-weekly, pays off in 310 months, instead of 360 months

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