Reducing Interest Expense On Your Mortgage

Did you know that by the time you have paid off your mortgage, you will most likely have paid over one and a half times the actual purchase price to the bank? This is because of the interest rates applicable to mortgages, and structure on which you loan is based. I’m certainly not going to rabbit on through all the different types of mortgages in this article, because we would still be discussing the topic after about 25 pages of reading. Instead, I’m going to give you a tip regarding mortgage structure which will help you to plan ahead, and possibly reduce the amount of interest you end up paying to the bank.

The tip is - choose a mortgage with a relatively short term, and additionally choose a fixed interest rate. Fixed mortgage interest rates tend to fluctuate less than variable ones, meaning you are able to budget for the interest cost each and every month. With a variable mortgage interest rate, you would have to redo your calculations every single month! Of course, with a shorter term on your mortgage, you will be paying more principal to the bank each payment period - but don’t worry - this pays your entire loan off sooner, and means you can be mortgage free sooner rather than later!