How to Lower your Expenses: Lowered Mortgage Expenses
A substantial percentage of our income goes to cover the cost of housing. This figure needs to be lowered, if you expect to have more disposable income for other areas of your life. You can do so by establishing a better deal on your mortgage. This is achieved when you get your loan to value ratio to go down. Here is more info about this strategy and the best way to apply it in your life.
A loan to value ratio shall be what the bank focuses on to see the relationship between the money you wish to access, and the value of the property you will invest it in. This shall be a percentage that tells them what amount of risk level they are getting themselves into. The higher the percentage, the riskier it is lending you the amount you are asking for. It is a straight forward high risk in cases where the property holds only a small amount as equity. Even if they were to take the property to settle the loan amount, it would not fetch the amount they gave you. You shall, on the other hand, see favorable interest rates the minute the percentage is low.
To get the loan to value ratio, you shall divide the mortgage amount by the sale price of the house. The resultant figure is normally less than zero. You can then take the two numbers to the right of the decimal point as the percentage. You can also arrive at a much simpler answer by using the LVR calculator, which keeps things simple. You shall find one on this site.
It is best if you can manage to keep the loan to value ratio lower than 80%. Most lenders view that as the low-risk threshold. When you have a lowered percentage, you will manage to get lower monthly payments. These much mower figures shall allow room for you to find money for other expenses in your life. You can manage that through various options. The first thing to do would be to give a larger down payment. You can then attempt to bring down the selling price of the house when you are still haggling. It is by lowering the price that you shall get ratio down once the calculations are made.
You need to know what happens when the loan o value ratio is worked out, and how to influence those calculations. It is best to have a lowered interest rate on the mortgage no matter what budget is in question. You shall find these and other helpful financial tips on this blog. You will thus discover more ways to keep the costs low, and thus to have more money open for spending.