10 TIPS FOR REDUCING HOME OWNERSHIP INTEREST COSTS

When considering whether or not to purchase a home in Canada, it is important to understand the associated interest costs. This is particularly true for individuals who are planning to make a long-term commitment to the property. Interest costs are particularly important if you are attempting to build equity in your home. Any way you can reduce these costs can help you become financially independent much more quickly. Here are some tips that can help you reduce the amount of interest you pay on your home mortgage.

1. Compare among lenders to find the most competitive rates – The more competitive the rate is, the lower your interest costs will be.
2. Take advantage of fixed-rate mortgages when possible – Fixed-rate mortgages offer lower interest rates than variable-rate mortgages because they protect you from rising interest rates over time.
3. Pay off any outstanding debts before applying for a mortgage- Having more debt can be associated with higher interest rates. It is especially important to pay off high-interest debts such as credit cards before applying for a mortgage.
4. Get pre-approved by a lender before shopping for a home- Pre-approval will give you a better idea of what you can afford and will help you identify your ideal price range.
5. Reduce the size of your down payment to reduce borrowing costs – While making a larger down payment means you borrow less money up front; it can increase your borrowing costs over the long term because the loan amount is larger.
6. Limit the number of lenders you use to compare mortgage rates- if you compare rates with multiple lenders, you are less likely to get the best rate available because you will be considered a high-risk borrower.
7. Obtain mortgage loan insurance to reduce the required down payment – Mortgage loan insurance can reduce the required down payment on a mortgage and make it easier to get approved for a home loan.
8. Arrange your monthly payments to evenly distribute your principal and interest payments throughout the year -Arranging your monthly payments to evenly distribute your principal and interest payments throughout the year can greatly reduce the total amount of interest paid over the term of your mortgage,
9. Consider debt consolidation to lower the amount of interest you pay on your credit cards- Debt consolidation can help you get a better interest rate on your existing debt and lower your overall monthly debt payments.
10. Avoid getting an adjustable-rate mortgage unless you can lock in at a fixed rate before the interest rate adjusts- While adjustable-rate mortgages may offer lower interest rates than other mortgage products, they typically have higher monthly payment requirements that can quickly increase over time.