How to Afford Your Mortgage

Six, maybe seven figures, over two decades, these roughly sum up how much a home loan will cost you and for how long. Quite scary, isn't it? However, it really isn't once you come into it prepared and divide the entire loan into manageable, monthly chunks.

In this article, we will share a few tips with you to show you how you can afford your mortgage from day one, once you're paying your monthly payments, and until you finally pay everything off. Sit back, relax, and read on.

  1. Divide, before you conquer. What we mean is that before you go to the bank, draw up your budget first. Even before your lender tells you how much you can borrow, you should know first how much you earn and how much you can afford. Take into consideration your utility costs, the kind of lifestyle that you live, and all the other things you spend your money on, and see how much of it you could set aside for your monthly payments.
  2. Avoid accumulating more debts. You know your budget and you know how much you should spend. And when you realize that your resources are limited, you'll know you couldn't really afford to accumulate more debts than necessary. So if you can, limit the number of credit cards that you own and the amount of time you use it. Plus, remember to set aside some money for your savings. You would definitely find it useful in times of emergency.
  3. Review your loan regularly. Just because your loan has set terms and value doesn't mean those are set in stone. For example, the RBA changes its rates from time to time, which could have a huge impact on your loan. When they announce a rate cut, try to see if your lender follows suit. In addition, check their competitors' rates as well. If you see a better deal from other lenders, inform your lender about it. Chances are they would be willing to renegotiate your loan with you and offer you a better deal. With this, you might be able to pay off your mortgage sooner, or be offered more manageable rates.
  4. Get a broker. While having a broker won't instantly guarantee a great deal for you, but his network and knowledge could. He could help you with all the necessary requirements for the loan, talk to the banks and other types of lenders, and negotiate a deal that is within your means.

For more information on how to get the best mortgage deals, contact our professional advisors at Rate Detective. They will even provide you with a rate comparison of the country's top lenders, thus ensuring you will find a package that is right for you.

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Published on October 10-th, 2012 in Home Loans
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.
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