Mortgage debt can be one of the biggest financial burdens. Right now, people owe over 7 trillion dollars in mortgage debt. While the debt problem is steadily waning as we slowly climb out of the last economic crash, there are still millions of people flailing to get out of the deep end. For many, there is no end in sight as to when they will be pulled out. The government is trying to come up with relief efforts to alleviate people’s debt as a result of the housing bubble, but most financial analysts are saying it is up to individuals to do their best to minimize their own debt.
Here are 5 tips for minimizing mortgage debt:
Remortgage. When you apply for a loan with a lender and get approved for a mortgage, you are usually set up with an introductory rate, which usually has much lower interest rates. However, most people don’t realize that around the one-year mark your lender automatically reverts your mortgage to the standard rate, which means higher interest rates and thus a bigger mortgage debt. If this happens or you expect it to happen, see if you can negotiate with your lender on a more agreeable rate – they might even lower it.
Find another lender, pay back more capital, and build more equity in your property. According to a recent article in a lending expert blog, more and more people are finding it easier to shop around for another lender that has more agreeable rates. One of the reasons why people’s mortgage debts are so high is because the interest rates are making it harder and harder to pay back their loans. However, if you find another lender with lower rates, you can effectively be paying more of your loan off and swimming further and further out of debt.
Offset your mortgage. One of the most popular new forms of being able to reduce your mortgage payments is to combine your mortgage account with your savings account. This way you can effectively lower your mortgage interest rates by deducing it from the interest rates applied to your savings accounts. This can be a great way to effectively reduce your mortgage debts and save money.
Make your mortgage payments flexible. If you are at about the ten year mark on your mortgage payments, it might be financially beneficial to pay extra payments on your monthly bills so that you can move closer and closer to paying off your debt – you can reduce the interest rates too so that you don’t have to worry about the end date being pushed further and further away.
Cycle your mortgage. If you are looking for a radical and savvy way to pay off your mortgage, you should look into cycling your mortgage. By cycling your mortgage rates you are borrowing money from other sources with lower interest rates to pay down more money on your mortgage payments, which typically have higher interest rates. Sometimes it is better to have a less burdensome debt, which is why mortgage cycling can be so attractive to homeowners.