More and more couples are entering the same vicious circle of mortgages. What once was a dream, soon after the wedding became a nightmare. I am pretty sure that you too recognize the situation as being a specific event in your life.
Civilized people agree to live under the same roof, but when the time comes to set priorities, each defends his/her own ideas. At this point the two parties (future customer & bank representative) are ready to meet and close the deal.
So here we go: the young couple chooses the house of their dreams and agrees to opt for a loan.
The compromise is as easy as a pie: if payments are not made in time, or not made at all, the company making the loan can take away both the loan and the property.
Obviously the new home owners have other things on their mind, than simply staying in their house. Youth reserves endless opportunities for people, in this spirit the young couple takes time to enjoy other things in life.
Unfortunately here comes the catch: those who apply for a loan are not among the wealthiest people, and there is always something to spend money on. It is never too late to save some money on your mortgage and use it in other directions. Here are some ideas to pay less and enjoy more.
The reason is very “simple”: the interest is calculated daily instead of being calculated monthly. Suppose the yearly interest rate is 6%, then the daily in a typical year is 0.016 %.
For example, a daily payment deal based on a £100,000 loan would work out at £16.44 per day and even if you are late with the payment, the advantages outweigh the disadvantages.
It is not brand new. It has a black tradition as it was first introduced as a method of saving money on mortgages by nobody else other than the bank itself. So, what is so revolutionary about it? You can administer this yourself without it costing you anything. The secret lies behind the average mentality of ordinary people. Gradually changing the way in which you pay is the answer.
Why bi-weekly and not another formula? Fortnight payments are the most simple and revolutionary methods. Americans especially and few other countries receive their paycheck in correspondence with this formula, thus you pay when you actually have most of the money. The mathematical advantage is relevant, because making 26 (there are 52 weeks altogether in a typical year) half payments would mean making 13 full mortgage payments. Splitting the payment, gives one additional payment!
Skepticism would force you to say that this is the work of a guy with a flourishing imagination, as banks do not agree to take such transactions. Correct. But don’t forget that you are the one administering your own budget. Easier said than done? Wrong! Create a savings account and deposit the sum, then when the payment is due, open the account and let the money flow.
Calculators can efficiently educate one, in how to take decisions in case he plans buying a new home. Mortgage calculators are excellent tools when somebody wants to know how much a loan will cost him/her. At the same time, these tools evaluate the possibility of reducing debt gradually, by the help of accurate monthly figures.
So how do mortgage calculators help people save money, if actually all that they do is to propose a future plan of payment? The answer is simple: they prevent people jumping into uncalculated expenditures well before the moment of the investment.
Additional expenditures will definitely not be saved in this case but at least you know that besides luxury, a professional bank representative will take care of your mortgage. By doing this, you will save a lot of time and headaches caused by complex terminology (let’s face it, it is still a privileged business) and by bureaucracy. Another advantage is represented by the fact that lenders work more easily with a broker, after all they share the same background and language.
Coming to a conclusion: a saving plan, no matter where it is implemented, has to be done from the first moment – and the sooner the better. The same applies with mortgages.