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Tips On How To Save Money - Your Mortgage (part 1)
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Tips On How To Save Money  -  Your Mortgage (part 1)

How do I save money? This is probably one of the most talked about subjects in today's society! Why, because I think the majority of us could all do with saving a bit of money. Lets face it, there aren't too many of us who wouldn't want a nicer house (or our first house), a nicer car, that dream holiday or simply to get out bad debt (eg, credit cards, etc). Unfortunately there is no easy way to save money. Probably one of the main reasons for this is that there are hundreds (if not thousands of ways to save money). The main intention of this article is to give a few tips that mortgage holders could start implementing straight away. I understand a large majority of readers are not home owners, so my next article will be dedicated to those readers.

Home Owners with a Mortgage

1. For a large number of us, our mortgage expenses probably make up our largest yearly expenses. Depending on where you live and the type of house you have will depend on how much you pay each month for your mortgage. For the sake of this example we will use the value of an average family home in Sydney, Australia. An average home in Sydney is worth around $550,000.00, so lets assume we have a mortgage of $495,000 over 30 years at an average interest rate of 7%. The mortgage repayments on this home would be approximately $3300 per month ($39,600 per year). Believe it or not, you could save around $5000 per year if you opted to pay interest only! In a lot of cases it is just a matter of contacting your bank and asking if you could opt for an interest only loan.

This method is extremely effective if you also have another debt where you are paying a higher interest rate, eg personal loan, credit card, or car loan. In this case, you may be better off financially to pay off the other loan with the money you are saving on your home loan. For example: - Lets assume you have just taken out a car loan for $20,000.00 over 5 years and are paying around $430 per month. The total interest charged for this loan would equate to approximately $5800. However, if you utilised the savings you were making off your home loan and made additional loan repayments of approximately $400 per week, you could save over $3000 in interest and have your loan paid off within about 2.5 years!

2. Most of us are unwillingly paying way more than we have to for our home loans. Believe it or not, chances are you could probably save between a quarter to a half percent interest on your existing home loan. On a $495000 loan, this could equate upto almost $2000 per year. Probably one of my best tips for anything when it comes to saving money, is SHOP AROUND! I would rather spend half an hour on the internet, phone or even going to the banks, to look for a lender that offers a lower interest rate than paying $2000 extra per year!! Websites like rate city are great for comparing home loans, or just Google - "home loan rates".

3. Do you have an extra room or a granny flat? Are you utilising this assset? Chances are you are probably missing out on earning a minimum of an extra $6000 per year in rent! Tenants are screaming for inexpensive accommodation and you could profit from it. There are a host of websites and ways you could advertise for a room for rent. A favorite in Australia is probably GumTree, this is a great site and visited by thousands of buyers and sellers every day!

4. Ask yourself, is the house you are living in really suitable for your needs? Eg, do you utilise the whole block, or that extra room? If you have answered honestly, there is a large probability that you don't really need all that extra space. If you aren't to keen on having strangers living with you (eg renting out a room) it may be a great idea to downsize (eg buy a smaller home). Don't take my word for it, scout the real estate websites to see how much you could save by selling your house and buying a slightly smaller home. If the new home you purchased was only $100,000.00 cheaper, you could save at least $680 per month on loan repayments, that is nearly $8,000.00 per year!!

I am hoping that some of you have found my article interesting and prompted some of you to take some action and start saving today! Saving a whole heap of money quickly isn't easy, the trick is to start saving somewhere and slowly watch your savings grow. There are literally thousands of ways to save money, so keep looking out for different ideas every day and you will save a fortune!

There are many questions and discussions to be had on this particular topic. I would love to hear your thoughts and experiences!

Street Talk

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