Do you wanna learn how you can get affordable home loans for low income earners? A lot of us are looking for a good home loan which both meets our needs and is affordable, but getting one needs you to learn some tips and tricks. So if you’re interested to learn about how to get an affordable home loan, please keep reading this article since our main focus is going to be on that.
1. Pay attention to what rate you are a paying
One major mistake a lot of people make is to go for variable loans which have standard rates, this will be resulted in them paying a lot more money in the long run wheras they could have saved all this money by just switching to a lower rate loan. Some of these lower rate loans are basic or discount variable loans. So don’t make the same mistake and switch now.
You might think that standard variable loans have a lot more pros compared to basic or discount variable loans, but it is not like that and if you pay close attention to the variety of futures which basic or discount variable loans offer, you will come to realise that a standard variable loan won’t do you any good compared to that. Of course a standard variable loan might offer you cheap rates, but it doesn’t let you have additional repayments.
2. Try to divide your payments
Instead of paying monthly repayments, you can always make two fortnightly payments each month which will be resulted in paying more money each month, but this will reduce the term of your loan which in the long run is to your benefit. Your interest will be calculated on a daily basis and if the number of your repayments are more, your interest will get lower over months. So as you can see, you can save a lot of money by applying this simple trick.
3. Have any extra money? Make it work to your benefit
If you have any extra money lying around, you can always invest it into your loan and this way you will pay less money in the long run. The way it works is like this: for example if your home loan rate is at 7%, every extra dollar you pay off the principal is another dollar you are not paying 7% on each year. Of course you can add your extra money to your saving accounts in a bank, but this way you’ll need to pay tax for that money, but if you invest your money into your loan, you won’t need to pay any tax and you’ll save a lot of money.
4. Merge your home loan with your other loans
Besides a home loan, we might have other loans like car loans or personal loans. If you merge your home loan with those loans, providing you have equity in your home, you will be able to pay off all of your debts quicker and your interest rates will be lowered and this will be resulted in you saving a lot of money. Some people might tell you thar merging your home loan with your other loand is not a good idea, but if you do this with a low mortgage rate while keeping the repayments of your unsecured loans, you won’t regret it.
5. Don’t be fooled by the initial low rates
The way lenders usually work is they offer you and enticing loan with low rates in the beginning 6 to 12 months of the term and then they charge you with crazy high standard variable rates. So don’t let the honeymoon phase fool you and try to think twice before going for it. So your priority should be trying to find a basic variable rate loan which has a lot of features and will let you take advantage of its affordable rates for a long time. Now you know a lot about affordable home loans for low income earners.