22

May

2008

Seven Tips For Saving On Your Mortgage

By Bruce Whitaker, President of BuyingBlock.com

Everybody likes to save money and it doesn’t stop at getting a mortgage! Here are a few ‘need to knows’ when looking for a new mortgage or renewing your existing mortgage.

1. Always let your bank know that you are shopping for a mortgage.

2. Keep your credit rating clean. Lenders primarily assess their risk on four parameters: credit rating, income, job consistency/security, debt service. The higher the risk, the less the discount. One suggestion; put your visa payments on ‘automatic’ payment—minimum payments automatically taken by your bank.

3. If you are looking at a variable rate mortgage, ensure that you read the fine print on what the applicable mortgage rate is in the event that you convert to a fixed term. Variable rates are a great way for banks to get you hooked (with offers of cash back or really low rates for 6 months, for example). You may save initially but the lenders are crafty and look to recoup their margins.

4. If you are switching banks, get the new bank to pay for the appraisal fees, if required, and the discharge fees from the old bank.

5. Put your mortgage renewal on a diary system. Lenders can secure a rate 90-120 days before your mortgage renews. Better yet, they should guarantee you the best rate between then and the renewal date.

6. Bi-weekly payments will save you a lot of interest. Simply, match up the mortgage payments to when your salary is deposited to your account.

7. Insurance companies are savvy—they market towards large groups of people (for example, University or College alumni) offering attractive discounts to members. Get the list of the groups and check to see if you or your partner is a member of one. If not, it might make sense to join one.

Next time, we delve into how to make the right decision when choosing among mortgage terms.

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