How to Lower your Expenses: Lowered Mortgage Expenses
There is a significant amount of our money that goes to the cost of housing. You need to keep this figure minimal if you are to be left with some change for other things in your life. You can do so by establishing a better deal on your mortgage. This is done when you lower your loan to value ratio. Here is more info about this concept, and how you can make it possible for yourself.
A loan to value ratio is the indicator a bank looks at to see how the amount you are asking for relates to the value of the property you are aiming at. This percentage shall express the risk levels you present to the lender. If the percentage is high, they shall be taking on a significant risk. When the property holds only a small equity, the risks involved shall automatically be high. It will still be a loss to them to take the property to sell to pay off what you borrowed. Where the percentage is low, you shall give favorable interest rates.
To get the loan to value ratio, you shall divide the mortgage amount by the sale price of the house. You can expect a figure less than zero. You can then take the two numbers to the right of the decimal point as the percentage. If that is too complex to comprehend, you can turn to an LVR calculator for a simple answer. You shall find one on this site.
It is best if you can manage to keep the loan to value ratio lower than 80%. This shall have most lenders viewing you as someone with a low risk to give money to. When you have a lowered percentage, you will be able to make substantially low monthly payment figures. These lowered payments shall open up your chances of accessing some disposable income to use in other things in your life. You can manage that through various options. The first thing to do would be to give a larger down payment. The other thing to do would be to try and bring down the selling price of the house as much as you can. When you get the price lowered, the ratio percentage shall automatically go down as the calculation is made.
It is an advantage to know how the loan to value ratio is worked out, and what you can do to make those points work in your favor. A lowered interest rate on the mortgage is welcome news in any budget. 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.