How to Keep your Budget Sustainable by Lowering the Mortgage
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 get to manage that when you arrange for a better deal for our 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 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. They shall have run at a loss even if they were to repossess the house to settle the loan amount. Where the percentage is low, you shall give favorable interest rates.
The loan to value ratio is a division of the mortgage amount by the sale price of the house. This usually gives a figure less than zero. You can then take the two numbers to the right of the decimal point as the percentage. For those who find that to be too much calculating, there is an LVR calculator that keeps things simple. You can have a look at it on this site.
You should always aim to keep your 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 lowered payments shall open up your chances of accessing some disposable income to use in other things in your life. There are several ways you shall manage such a feat. 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 will find these strategies and others on this blog. You will thus discover more ways to keep the costs low, and thus to have more money open for spending.