We are all aware of the importance of getting the lowest mortgage loan rates. However, do we know these 5 secrets that can help us to save more money?
Do not be in a rush to pay off your Mortgage Loan
Being debt free as soon as possible is a common advice that our family and friends always tell us. However, the reality is there is much to gain from taking your time to pay off your mortgage loan! Firstly, choosing to pay off your home loan with the spare cash lying around will only reduce your financial security. Instead, consider using the extra cash to invest. If you think investment requires brains and a wealth of knowledge, you are not wrong. However, even the simplest of investments are able to provide a return of at least 3%, which is already greater than the interest rate of your home loan.
Always Refinance after the Lock-In Period
When the two- or three- year lock-in period is finally over, it is as if you are finally free from the shackles! Similar to how you would re-contract your mobile plan at the end of your contract, you should also refinance your mortgage loan once the lock-in period is over. In fact, you should be on the hunt for a new mortgage loan before your lock-in period is even over so that you can refinance once the lock-in period is over.
Of course, this is not the ultimate rule. The reality is you are most likely enjoying promotional mortgage loan rates during the lock-in period and more often that not, refinancing means getting new promotional rates from another bank. However, if the market is not doing well, refinancing may mean higher mortgage loan rates. As such, it is important to assess the situation instead of following this rule blindly. One thing for sure is – you should be doing your homework and research weeks before your lock-in period is over to see if you should refinance and whether you are able to get better mortgage loan rates.
Engage a Mortgage Broker
Research, research, research – it is not for everyone. Even if you try hard, how can you be so sure that it is hard enough? Stressing over whether you are getting the best mortgage loan rates or worried that the banks are biased? Engaging a mortgage broker like KeyQuest Mortgage ensures you get an unbiased comparison amongst the banks in Singapore, helping you to get the best possible mortgage loan rates. By helping you to shop for the best rate is already unquestionably the biggest advantage of hiring a mortgage broker. This is because even a small difference in mortgage rates can save you up to thousands in the long-run. Simply applying for various mortgage pre-approvals on your own will take up half your day, so why not get a mortgage broker who has the connections with the banks in Singapore to help you do the work? Furthermore, our connections allow us to possibly get waivers for various types of fees such as application fees.
Use an Interest-Offset Account
An Interest-Offset account is a dedicated account linked to your mortgage loan where repayment is done and can help you to reduce your mortgage. While it acts like a savings account, it can earn a higher interest rate that matches your mortgage loan. Like what the name of the account suggests, you are able to offset your mortgage interest with the deposit interest earned. However, the rate does not apply to your full deposit but rather to a certain percentage, as determined by individual banks themselves. Nevertheless, this reduces the cost of financing and increases interest savings.
Do your Homework
Getting as much advice as possible, especially professional advice is wise. However, it is also important that you do your own research and increase your knowledge of how the mortgage industry works. Whether is it understanding the different terminology or learning how to read the fine details in home loan contracts, all these will be beneficial to you when it comes to securing the best home loan. Furthermore, you will be equipped with knowledge that will not only allow you to ask intelligent questions but also analyse the information presented to you so that you do not just absorb information at face value. Instead, you are working together with your mortgage broker to make an informed decision.