It is said that those who fail to plan, plan to fail.  While that might not be quite true there is certainly some truth in it, especially when it comes to finances. If you don’t do at least some financial planning in your life, it is highly unlikely that you will reach your goals. You may think that having a career that pays well is all you need, but most financial advisors will point out the numerous people on high wages that are strapped for cash, simply because they don’t plan their finances.

A mortgage is one of the largest costs most of us will ever have to pay. It takes many years to pay it back and is quite a struggle for some people. Others flounder and fail, losing their home and going bankrupt. This could often have been avoided with advice from a financial planner.

Most mortgages are taken out over a 25-30 year period. The repayments are made monthly and to start with, most of that repayment goes on paying the interest, while a smaller portion pays down the principal.  When you apply for a loan, make sure there is no penalty for paying it off earlier. If you can then pay extra for the first several months it will save you a great deal on interest; often thousands of dollars.

If you go all out to pay off the loan in say, ten years instead of 20 you will halve the interest paid overall.  Since the addition of interest often means you are paying back double what you borrowed, this can be a very significant savings. However, not everyone can do it; much depends on their income and their financial plan.

There are many ways to save on the costs of a mortgage. However, getting the right kind of loan in the first place is important. If you think you may move before paying off the loan, getting a portable loan that can be applied to your new home without additional costs is important, otherwise finishing up one loan and starting up another can cost thousands of dollars.

Paying your mortgage fortnightly instead of monthly can also reduce the amount of interest you pay over the lifetime of the loan, because those extra days in some months mean you are paying down one month extra per year.

Having an off-set account into which you place all your income can also help to reduce the amount of interest because it is calculated daily, but charged monthly, so the more money you keep in that account, the less interest you’ll pay on the loan. However, such accounts often attract a fee so you have to make sure the fee is not going to cost you more than you’d save.

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