4 Tips to Save Money on Your Home Loan

Calculator and MoneyThe following article is a guest post. Please see my disclosure statement.

Getting a home loan can be expensive. Understandably, though, it is the best investment that a person can ever have, so sure it doesn’t come easy. But there are ways to make home loans more accessible and cost-effective to the working professionals and real estate investors. How is that even possible? Read on.

1. Consider getting a special packaged mortgage
Getting the right type of mortgage in the beginning can save you money and time. You should get a special packaged mortgage if you like the idea of;

Taking out at least $250,000 home loan
Using multiple credit cards
Having a variable rate home loan
Fixing your loan in the near future; or part variable, part fixed
Bundling your several loans all together

This home loan package attracts many potential customers for its money-saving benefits. It can reduce a substantial amount of money in interest off of your mortgage and it may come with affordable annual fees. Thus, if used correctly, you will be able to pay your loan at a shorter period of time.

2. Combine all of your active loans into a single package
This can be done by linking up your variable rate home loans to a 100-percent offset account. If you are a working professional, you might want to have your employer transfer a portion of your salary to a bank account that is linked to your home loan. As soon as the account receives money to keep the maintaining balance at bay, it may also reduce the payable interest on your loans in no time. For example, a $10,000 maintaining balance throughout the life of your home loan could give you approximately $47,000 savings off of 7.22% p.a. interest rate over a 25-year loan term.

3. Ask your lender about any available discounts
Yes, it is possible get discounts on home loan products and interest rates. For instance, in special packaged mortgages, the lender may charge you with an annual fee of up to $400. In return, you will be entitled to receive a friendly discount on the interest rate and on some other services like insurance products, check accounts, credit cards, and personal loans. The amount of discount largely depends on the size of all your loans, especially if the total is equal to a minimum of $250,000. And even if you have multiple loans in the package, you will only have to pay for a single annual fee.

4. Use your credit card(s)
When you’re under a special packaged mortgage, it is advisable to make use of your credit card(s) when purchasing items. No, really it works. You should use your credit card on every purchase you make rather than withdrawing funds from your account. And then, when the bill is due, use your linked (offset) account to pay for it on-time so as to avoid paying for the interest on your credit card bill. Add the fact that some credit card facilities offer a reward program, so you should be able to earn enough points to reimburse some items or earn discounts.

Indeed, there are cost-effective ways to go beyond a typical home loan. You can combine different loan products all together to avail of discounts on the interest rate throughout the life of the loan. As a result, you will earn enough savings to shorten your payment term. Just make sure to discuss with your lender about the features and discounts attached to a home loan product so you will be able to know if it is exactly what you’re looking for.

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7 Saving Habits To Start Now

PIggy SavesIncreasing your savings account doesn’t have to be painful. Even if you’re on a tight budget there is usually a spare dollar or two you can add to your savings. If you work on getting yourself into a savings habit, then you can enjoy watching your money grow. Here are a few tips we use:

1. Donate a dollar to yourself
Every morning take a dollar out of your wallet and add it to your money stash. You won’t notice the difference in your pocket, but you will see your savings grow faster. If you can spare two dollars, do it! Use a large change jar, empty milk carton, or some other designated container. It’s not so important where you collect the money just as long as you collect it. Periodically remove the money and deposit it in your savings account.

2. Save your change
At the end of each day put the change from your pocket into the jar. These amounts will add up surprisingly fast as long as you do this consistently.

3. Set up automatic deposits
Your bank can set up automatic deposits to your savings account each week. The trick is to find an amount that you won’t miss from your paycheck and have it deposited on your paydays. Even a small amount like $5 or $10, will add up over time.

4. Let the credit card company add your change
Several large credit card companies have a rewards program. Some programs work similarly to the change jar. They round each purchase up to the nearest dollar and put the change in your savings. Some companies even match a percentage of your savings from this method, so it’s free money to your savings!

5. Put your savings in an account that pays a higher interest rate
Check with your bank for their rates on mutual fund or money market accounts. As your savings grow CDs pay better interest than regular savings accounts and they give you an incentive to leave it and let it grow.

6. Start a tax-deferred retirement account
Check with your employer about putting automatic deposits into a 401(K) plan. Make the amount small enough so that it doesn’t affect your lifestyle. Your employer might even match a percentage of your deposits! If they don’t have a retirement fund program, then talk with your bank or an investment advisor about starting an IRA.

7. Buy at a discount and save the difference
For items that you were going to buy anyway see if you can find them on sale and then put the difference in your savings. Make the effort to use some coupons at the grocery store and then save your savings from your coupon items. As you see your savings grow from this method, “couponing” becomes more fun!