Using a Home Loan Calculator and Lowering Your Mortgage Costs

October 13, 2011 by  Filed under: Loans 

Once you have successfully acquired mortgage financing to buy your home, the next thing that you have to do is faithfully meet your monthly financial obligations. During the early years of your mortgage, a large portion of your monthly mortgage payments will comprise of interest. This means your principal payment will be slightly less. But as you move forward your mortgage, your interest payments will be reduced as your principal payments increase.

After some research and a bit of mortgage comparison, the mortgage you took out today is probably the most suited for your circumstance. But after a couple of years, new and more affordable mortgage products will emerge. Using a home loan calculator, you can compare your existing home loan with the new ones in the market to find out the difference in terms of mortgage savings.

As a home owner, your primary burden will be to meet the interest payments. That means if you plan to save on your mortgage, your objective is to lower your interest. Below are some interesting mortgage reduction practices that you can consider:

1. Make additional payments every time you can. Additional payments decrease the principal amount of your mortgage, which in turn decreases the loan’s interest payment. Try to do this at least one per quarter. You don’t only get to lower your interest and loan payment, you also shorten your loan’s term. Use a mortgage calculator to determine how much you will save on your interest payments and your loan payment in general.

2. Another way to reduce your mortgage payments will be to make fortnightly payments. Experts would even say that it is in fact the best way to lower mortgage costs. Using this particular method, you will be making two fortnight payments each month instead of the usual single payment. On the average, most home owners can chop up to five years off their mortgage by making fortnightly payments.

3. Last but not the least, another thing you can try is mortgage cycling. One of the most recent mortgage reduction trends today. In mortgage cycling, what you do is make payments to your mortgage twice a year. The payment will be huge, but the upside is that you will be able to cut a significant amount from your mortgage debt. Aside from that, this method also allows you to build equity on your property. Of all the mortgage reduction methods we’ve mentioned, mortgage cycling is the best choice especially when you intend to establish equity.

No matter which type of mortgage reduction method you choose, the one thing to keep in mind is your ability to make ends meet. You have to determine if you can manage your payments comfortably. Using a home loan calculator can help you to plan out your mortgage reduction measures.

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