Having a mortgage can sometimes set people back, what many don’t realise that the best loan NZ they are going into has an interest rate, and what they think they might be paying back is actually a lot more. Reverse mortgage is based on the assumption that your mortgage can be reduced at a significant rate, meaning you will have less to pay weekly/monthly/yearly.
Your mortgage can be reduced in a few different ways. If you come into a bit of money, you can pay off your mortgage earlier, but this doesn’t necessarily mean you will save money. In fact, the banks rely on the interest to make their profit and by denying them of that interest is most likely going to get your final price capped. This means that they are still likely to charge you a penalty rate for paying too soon. The best way to reduce your mortgage is to pay (slowly) the original loan. When people put money towards their mortgage they don’t realise that the first thing they are paying is the interest, while this still needs to be paid, you can do it a lot more efficiently. By paying the original loan, you are reducing the rate of your interest, which means that technically down the line, you will be paying less. There are other options such as consolidating your mortgage with your other debt. This is very popular with some people and many banks are eager to buy your debt as it means the interest will go to them. Consolidating your debt and your other loans is a great way to find a better rate for you to pay it back. A lot of people don’t realise just how much money they are throwing away each year by having a variety of interests attached to their loans.
It might not be wealth creation, having a mortgage strategy can be you best option if you find yourself in a tight spot when it comes to finances. Another problem most people have with their finances is that when one credit card is paid off they have already join the queue to sign up for another, thereby the vicious cycle of owing money becomes a normality. It is in our nature to want things now and not have the patience to wait but saving our own money is something we seem to forget is an option. By saving our money and holding off that new flat screen for a little while, we will find ourselves only paying once off and being free from the bonds that hold you in debt of the banks and therefore making our own lives a little bit less stressful when it comes to financial commitments.