Home Loan Mortgage

By: EconomyWatch Content   Date: 30 December 2009

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It is quite difficult to say as to which home loan product is the best to choose from hundreds of them that are available. The right home loan product differs from one borrower to another. So, it is vital to identify essential factors while selecting a housing loan.

Home Loan Mortgage: Tips to Save Money

The following are some useful tips that will help borrowers to save money on home loans:

Pre-approval: By getting a pre-approval from your lender, you can multiply your chances of obtaining a good home loan deal. After the Credit Bureau was set up in 2002, your history of repayments and credit cards can be checked by loan agencies anytime. They can also check if you have ever been sued in case of default of payment. In such a scenario, it will become very difficult to take a loan and even if you mange one, the loan amount will be lower or the interest rate will be on the higher side.  

Interest-only: A home loan package with an interest-only option is a smart alternative for borrowers who fall into the high tax bracket. A part of monthly installments (in case of investment property) that goes towards interest is tax deductible. This helps to build savings in income tax. Short-term investors can also benefit from interest-only home loan products. They can reap benefits through lower cash flow until the property is sold by repaying only the interest. This will allow them to make investment in two different properties.

Transparency of rates: Home loans that have interest rates that are available publicly should be considered by those borrowers who prefer complete transparency of rates.

Promotions: Many banks come out with special promotional packages. To understand these packages and take full advantage of them, consult a mortgage broker. S/he has thorough understanding of the various products and can help you choose the one that enables you to save more money on interest.

In most cases, banks pay for the services of a mortgage broker, thereby saving you more money.


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