Mortgage Credit: 5 secrets you must know to pay less interest

Who doesn’t like to pay less? Saving some money is always welcome, as it can be used to pay debts, buy something that was missing at home, or simply not be as tight during the month. Taking all this into account, you will undoubtedly be happy to know that you will be able to save on the payment of your mortgage credit.

Whether you are paying your mortgage right now or you plan to apply for it in these months, these tips will be of great help because they will show you what tools or tactics to use so that the interest to be paid is reduced. Remember that a change, however small, in your credit rate, can mean a few months less than payment.

So what can you do to generate savings on your credit payment? We show you now:


1. Find a debt purchase

debt loans

This involves transferring your mortgage debt to another bank. How can it help you pay less interest? Something to keep in mind is that the market is constantly changing and the rates that were the best six months ago are likely to have been improved by other entities. So if you are a good customer and have made payments on time, any financial institution would be happy to transfer your mortgage under their wings.

This will allow you to negotiate a new interest rate, which will result in the money savings that we are looking for. Is there a limit of times you can do it? No, that is totally up to the user, but it is always advisable to evaluate what they offer you and even give your current bank the opportunity to respond, because sometimes they tend to surprise you with a better deal.


2. Acquire insurance from outside the bank

Mortgage loans come with some insurance that are mandatory, however, it is not determined that you purchase them with the financial entity that issues you the money. You can ask about external options that may be cheaper, this will also have an effect on the fee and the interest to pay. The recommendation is that before taking any action, perform the calculations carefully in order to have the real numbers and be sure that it does not imply an additional expense.


3. Suspend account statement shipments

credit loans

Your statement shipments also represent an extra investment that may be reduced. How? Changing the delivery format; You can receive it in your email. This is not only more comfortable because you can consult the information from your cell phone or laptop, but it will also allow you to reduce spending.


4. Reduce the term of the credit

An additional way to reduce interest has to do with reducing the term of the loan. If you financed it for 20 years, it means that you will pay 20 years of interest. The less time you have the credit, the less you will pay. Of course, this causes the monthly fee to rise, so it is necessary to find a balance.

It is worth reviewing this point because in all the years that the credit lasts it is very likely that your working or financial conditions will change, especially for the better, which will allow you to be in a position to make larger payments and thus have everything you need to reduce the term of your credit.


5. Maintain a good credit history

good credit history

While this is good when applying for any type of credit, it can also help you reduce the interest on your mortgage. The bank takes your financial profile into account when assigning interest rates; So, if you are about to request one and you have a good behavior, this will help make the conditions they offer you even more attractive.

If you already have a loan, don’t worry! Because you can still take advantage of this point, since, when requesting a purchase of debt or transfer of your credit to another entity, they will have to evaluate your profile. Many things change over time and working to improve your financial history is something that will undoubtedly help you generate savings with your mortgage credit.

Loan Reduction Calculator.

Have an overview of the financial situation

Have an overview of the financial situation

Is everyone well advised to have an overview of their financial situation? Respectively, knowing which interest rate to pay for the overdrawn checking account? And what return, for example, is achieved with life insurance? And how much these two amounts are.

It is important to deal with the topic

It is important to deal with the topic

For those who are currently facing outstanding debts, now would be a good time to reschedule them, because there is currently a favorable interest rate level. This means that if someone, for example, has a current account with a negative balance of 8,000 USD and pays 10% interest, i.e. an amount of 800 USD per year, it would be worth rescheduling this amount on a cheaper loan. For example, a loan with 3% interest.

That would lead to an annual interest saving of 560 USD. Which can be invested in the reduction of the outstanding balance in order to further reduce the interest burden. It can be seen that it literally pays off to deal with your financial situation.

For outstanding accounts, it is important to know the effective interest rate

For outstanding accounts, it is important to know the effective interest rate

It is also important for the whole thing to know your effective interest rate. That means surveying the “true” interest rate, including costs and other fees. To make everything easier, it is advisable to use a loan replacement calculator as an aid. Especially with long terms, for example the financing of the home, even a slight deviation behind the second decimal place causes an enormous impact due to the compound interest effect. Either in a pleasing economic sense for the bank, or for its customers.

But before switching from a loan agreement with bad conditions to a new loan agreement with better ones, there should be clarity about the legal basis of the new loan agreement. All clauses and conditions should be understood. What happens if you are in arrears with the installments, or what the consequences will be if, due to an event, you have the possibility to pay back the entire outstanding amount at once. Especially in turbulent economic times like this one should be prepared for all eventualities in credit transactions.

There is considerable potential for optimization in financial services

There is considerable potential for optimization in financial services

Many bank customers do not habitually deal with their financial situation. It should be borne in mind that all customers who have a good credit rating, i.e. a regular work income that is commensurate with their financial obligations, have a good negotiating position with the banks, on the one hand due to the currently favorable interest rate level and on the other hand due to the increasing competition in the financial sector.

The opportunities to obtain information about providers and market conditions on the Internet have never been as attractive for bank customers as they are today. Of course, you can also go to your house bank after using the loan replacement calculator and try to negotiate better terms for the existing loan commitment with the printed new offer in hand.

Low Interest Credit Criteria

A loan is required for almost every major purchase in life – you can save a lot, but the enormous costs that can arise when buying a property or a car can rarely be financed in cash by strict savings. Of course, if you want to take out a loan, you have no interest in paying more than you have to.


Loans are offered by almost every bank

Loans are offered by almost every bank

After all they are financed mainly from the lending business in addition to other financial transactions. It also covers interest paid to customers for their investments, because savings or assets in accounts are basically nothing more than a loan that a customer gives to a bank and for which the bank pays interest.

A low-interest loan can be granted in two ways – either by a bank or by the public sector in the form of a low-interest loan linked to certain funding purposes. State / public loans are often not only cheaper, but sometimes even completely free of interest.

However, the range of public, low-interest loans is often very limited: the loan is only used for a specific funding project and is earmarked for a specific purpose. So it must not be used to finance other things. Dedicated, low-interest or interest-free government loans exist almost exclusively for the construction sector, eg. to finance certain modernizations or renovations (often with the focus on energy saving) or to promote energy-efficient new buildings.

However, given the banks’ low-interest loans, some are reluctant to let the state dictate how they should handle the borrowed money and what they should use it for. Only: Low-interest loans that are often advertised do not exist in principle, since they are so-called advertising interest. You can certainly get these, but only if you have a very good credit rating. Generally speaking, this is always the person who basically does not need this loan.

Creditworthiness is primarily dependent on income and Schufa information

Creditworthiness is primarily dependent on income and Schufa information

The higher the income and the better the Schufa, the better the credit rating. While credit rating is also based on other factors, the salary and amount of financial obligations that existed or were in the past are the main criteria.

A low-interest loan also takes into account the type of income. For example: a self-employed person can have a very high income, but this is not fixed – he cannot guarantee the bank 100% that it will be just as high in a few years. This lowers the credit rating because security comes first (unless there are unencumbered assets that can secure the receivable). A loan for the self-employed, which should be low-interest, is therefore rather the exception.

A senior official, on the other hand, can earn a lot less, but since it is very unlikely that he will lose his income base overnight, this income is much safer from the bank’s perspective. A medium to high-income civil servant has a much higher credit rating as long as he does not have too many financial obligations (other loans).

A low-interest loan can, however, be made with a bank without too much consideration of the creditworthiness. However, these are usually low-interest small loans over sums in the lower four-digit range, which are usually only awarded when additional bank products are concluded, eg Opening a salary account or securities account with a minimum deposit.

The creditworthiness is still important here, but with sums of a few hundred or a thousand euros the bank is often only able to pay, since these types of loans are low-interest, but are quickly repaid and there is also security at the bank through the salary account or a securities account.


Get offers of low-interest loans from other banks

low-interest loans from other banks

You should first contact the house bank. The bank knows its own financial situation best, while other banks initially see new customers in a more differentiated manner due to a lack of insight into their previous financial possibilities. Nevertheless, you should still compare afterwards, because the house bank can, but does not have to be, the cheapest alternative. The house bank is always a disadvantage when it can be seen that a customer has hardly any money at the end of the month or often overdraws his account. However, a third-party bank can also find out about Schufa.

It is only important in a credit comparison that the effective annual interest rate should always be compared – all other costs and interest rates are basically just a facade, since all costs have to be included in the effective interest rate and only the loan that offers the lowest effective interest rate is favorable,