Managing your mortgage loan as if it was a strict diet you need to adhere to is the best thing you can do. Having a mortgage is no joke as it usually requires tedious planning and discipline.
Mortgage loans often take years to pay with high interest rates and fees on top of the amortization. Here are some things you can take note of when managing a mortgage loan.
When you have extra cash, pay an additional amount to lessen your total outstanding mortgage. This will help decreasing the interest fees payable since your principal outstanding due was reduced due to the extra payment. The lender may charge you additional fees for recomputation of your monthly amortization but that would be minimal compared to accumulated generated from interest rates at the end of your mortgage loan term.
Like any other loan, additional payments help reduce the principal. So if you have extra cash, instead of buying yourself those new set of wheels, try putting it on your mortgage to either shorten your loan period or minimize your amortizations that are due.
Your mortgage charges different fees with applied interest rates. Make sure you are aware how these fees are applied and how they work. Because one of the things that can affect you most are penalty fees. These fees are high enough to make you read your terms over again.
Penalty fees are applied when a term in your loan contract was breached like paying beyond the due date and payment of insufficient funds. Always remember to watch the fees due to avoid penalty fees that can hurt your pocket.
Choose for a Short Term
If you have the capacity and ability to pay off the mortgage loan on the shortest possible term, choose the shortest possible term. Dealing with future means dealing with uncertainty. The shorter term that you choose means you have less risk involved in your mortgage loan. Also, a short term fixed deal saves you cash and tend to be a lot cheaper.