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Getting the Best from your Mortgage

A mortgage is usually by far the largest financial obligation you will ever have. Big savings can be made by negotiating and managing your borrowing effectively. Here are some tips.

  1. Borrow as little as possible

    2. The more you borrow the more it costs, so don’t be tempted by the Bank offering you more than you actually need.

  2. Repay the loan as quickly as possible

    3. Total interest on a 25 year table mortgage of $100,000.00 at 7% is $112,034.00. For the same loan for 15 years it is $61,789.00. You save $50,245.00.

    Increase the amounts of your mortgage payments as your income increases. This will shorten the term and result in more big savings.

    Pay weekly or fortnightly rather than monthly. Payments of $1,000.00 per month mean total payments of $12,000.00 per annum. Payments of $500.00 per fortnight make total payments of $13,000.00 per annum. You therefore pay off the loan more quickly and save interest.

  3. Shop around and negotiate

      • The home loan market is very competitive because mortgages are safe lending for Banks.
      • Always negotiate the interest rate. The total interest of $61,789.00 in the above example reduces to $59,284.00 if the interest rate is 6.75%, another $2,505.00 saved.
      • Fixed rate loans are usually at a lower interest rate than floating.
      • Negotiate fees. Usually the Bank will reduce or waive its establishment fee, but not if you don’t ask.
      • Legal fees. Many Banks will make a contribution to your legal fees in return for your taking a loan so always ask for this. It can only save you more money.
      • Valuation fees. If your property has a recent Government Valuation that supports the amount you wish to borrow, ask the Bank not to require a registered valuer’s report. This could save you a valuer’s fee of around $400.00 or more.

  4. Review your mortgage regularly

    5. Review your mortgage regularly, particularly if:

    • There is a change in market interest rates.
    • A fixed rate period ends.
    • You receive a salary increase or lump sum payment e.g. a bonus or legacy.

  5. Talk to us

    6. Our property team deals with large numbers of mortgages all the time so we can give you up to the minute information and help.