It is indeed tough to manage your finances, and it gets even more challenging if one is going through a rough economy. Everywhere there is a scenario of financial gloom with stock markets crashing and news of job losses almost in every sector. Businesses are failing, and the grocery and utility bills are hitting the roof. It is no surprise to see people getting stressed-out on how to stretch their paychecks, and they feel completely helpless. A mortgage is a common and major expense with most homeowners.
Well, nevertheless, one has to survive and manage their mortgage, and the only way to do so is by keeping your personal economy on solid ground, even if the economy around is grim.
Here are some useful tips on how to manage your mortgage successful even in tough times.
Start saving and investing – Take advantage of compound interest and get more returns and build your wealth slowly but surely. Make the most of some of the investment plans and start early.
Lower expenditures- While one is advised to live within their means, but if one is serious about their mortgage and saving, they would probably need to live below their means. This is a great way to boost your personal financial health in today’s economy and reduce your expenses and utility bills.
Save for rainy days – Things often do not turn out as we expect, and it is common sense to have some buffer ready to meet the unexpected. One could face a medical emergency or lose their job. But if you have some cash stashed away, you can stay ahead of your payments. Cash Lady is always there to help you tide over your cash emergencies.
Shop around for the best deal – Don’t be afraid or shy to ask for a better deal when it comes to a mortgage. After all, it is a highly-competitive world, and there are plenty of financial companies who do not mind-bending their rules to get more and long-term loyal customers.
Avoid too much mortgage – It is advisable to not to take on too much debt during tough economic times and so make sure that you don’t take on too much mortgage. The debt servicing costs should not exceed 30% of your income.
Use mortgage as longer-term debt – As mortgage rates are lower when compared to other borrowing rates, it makes sense to use the mortgage as longer-term debt. It would be easier to pay off your mortgage debt rather than a credit card debt.
No need to pay SVR- SVR or the standard variable rate is the rate charged by a lender after a mortgage deal has been made. However, in some cases, the borrowers pay SVR needlessly, and the current SVRs are two or more percentage points greater than the best-discounted deals in the market.
Overpay mortgage – It is a good idea to overpay the mortgage as the step is not only tax-efficient but also sensible from a risk viewpoint. Flexible mortgages allow penalty-free overpayments.
Consider a remortgage – The process of remortgaging is fast and simple and a good way to avoid the lender’s SVR. However, it requires several months of advance planning on behalf of the borrower. He needs to remain in touch with a broker or lender in order to look for a new deal.
Beware of any hidden charges – Many lenders charge their borrowers with mortgage redemption fees that are subject to increase at any time. As a borrower, one should be aware of those extra and hidden charges.
It is indeed tough to keep your personal finances in good shape, especially under the current economy and take good care of the mortgage. Nevertheless, the above-listed tips provide useful guidance and professional advice from the investor’s perspective.