Do you have the right mortgage loan? Right now, you can get a 30-year fixed-rate mortgage at 2%, but thinking about the interest rate when choosing a loan is not enough. What is the right mortgage for you?
The interest rate on mortgage loans has fallen to a level so low that it is almost too good to be true, but it is good enough. However, it is important that you know your options if you want to get the most out of the low interest rate in your finances.
How to choose the right mortgage loan
There are three things to consider when choosing mortgage loans, and it is important that you choose the right one for all three.
- Repayment profile
It is important that you choose the right interest rate because the interest rate both charges your finances with cost and risk. You can choose between fixed and variable interest rates depending on whether you can tolerate risk in your personal finances or not.
The opportunities are many right now because you can leverage the very low interest rate to get rid of your debt faster.
Low interest rates make it easy to withdraw debt
Are you able to pay 4% on your loan today, and if you can get it to 2%, the low interest rate means that you can withdraw 2% more on your loan. You have to take into account a little lost tax deduction, so the amount is actually a little less. The point is, however, that you need to use the extra ability to pay, the low interest rate gives you to pay off your debt faster.
This means that you have the opportunity to choose loans with a considerably shorter maturity. So you should not choose a 30 year loan again, just because you have had a 30 year loan so far.
Use your profits to pay off mortgage debt
If you do not use everything you earn, you have the opportunity to spend just a little more on your loans and in this way improve your personal finances.
As you can see from the overview from the link above, with an increased payment for a few thousand dollars a year, you can save yourself interest expenses for the rest of your life. This will significantly increase the impact of the interest rate effect on your economy. This is because you reduce or completely avoid banks and bondholders taking part of the cake.
If you have bank loans in addition to your mortgage loans, you must be aware that it is probably best to pay off these instead of your mortgage loans.
See what interest rate you should demand on your bank loans
The fall in interest rates and the new cheap loans mean that you should consider your options now.