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Knowing how your mortgage works can help you keep it from working against you.  Many people think that their mortgage payment is only used to pay off the amount of the loan.  That assumption can hurt those people, as the mortgage payment is based on the length of the mortgage loan taken out.

1. How a Mortgage Works

If a mortgage is to be paid over 30 years, the payments extend the amount owed, due to the interest charges added to the total. This interest is also compounded, meaning eventually you will also pay interest on this interest. Quite simply, a large chunk of you payments could be devoted to simply paying interest.

2. Getting the Best Deal

Once the interest has been paid, the loan amount will be lessened each year and the 30-year mortgage will be paid in full with interest at the end of the 30 year period.  Understanding that your mortgage payment is actually an interest payment might help you to try and learn how to save money.  For instance, make sure that you can pay more than the monthly payment and that you can even pay in full. This may sound like irrelevant, but an unforeseen inheritance or great night at the casino could make this a distinct possibility. Also, make sure you shop around for the best deal. If your credit score is low enough, you may be able to get a great interest rate!

3. Paying it Off

You can save money on your mortgage by making the mortgage payments on time, avoiding late fees. If you can pay more than is due, this will also help. An extra $100 a month means an extra $1200 a year and this could save you years of payments. Try to anticipate your future income and you could make sure your payment plan fits well.

4. Tips and Secrets

Your mortgage is attached to the property that you have borrowed money to buy.  However, you are still in control of that property if you continue to make your payments on time. For instance, if your house is a little bigger or nicer than necessary, you can sell your property for more than you have borrowed to buy it and use the proceeds to pay off your mortgage and make a profit.  Or, if you have a great interest rate on a savings account, you could put the money you’d normally use to make higher payments in this account and profit – then use the profit to pay a big chunk of your mortgage in a lump sum.

It’s easy to save money on your mortgage, but you need to understand it fully. Speak with your lender to find out where every dollar you pay goes and ask every question that comes to mind. Also be sure to ask for any ways you could say money, because you’d be surprised at the secret options out there!

You may want to do some renovations, but you know this isn’t the house you are going to stay in forever. In fact, you might even be considering selling it in a few years time. All real estate agents would tell you not to overcapitalize on a home you are just going to sell anyway, so what are some renovations you can do that will actually add value to your home? If you had planned to do any of the changes that appear on this list, then you are heading in the right direction.

Knocking Out Walls

Removing non-structural walls from some rooms can really open up a house and make it appear larger than what it is. If you choose which walls need to be knocked down wisely, you should also find the natural light filters throughout the house better, giving it a larger, lighter and more airy feel. It also helps to take out any space barriers such as kitchen islands from a small kitchen.

Knocking out a back wall so the house flows easily into the garden area looks great and is perfect for entertaining too.

Don’t just knock down walls that will make two bedrooms into one, as two smaller bedrooms is still worth more on the market than one large one.

Kitchen and Bathroom

Updating your kitchen or redoing your bathroom to make it more modern will add quite a lot of value to your house. Again, it is possible to overcapitalize here if you renovate beyond the means of the house or neighborhood, but mostly just updating either will bring you more gain than harm. Consider where the house or unit is situated before you buy the gold plated tap handles or the imported Caesar stone bench top for the kitchen. If it is a unit in a building that doesn’t look great on the outside or is in a fairly low income area, then you may not want to buy the highest quality of everything as the people who will be looking to buy from you may not have the budget for top quality finishes.

Natural Light

Anything you decide to do that will brighten up the home or bring in more natural light will help add value to the house. This can be as easy as changing dark, heavy drapes to light blinds or blinds that are semi-transparent and still let in a lot of light. You can also replace external doors with ones that are partly made of glass panels. For something a bit more expensive, consider having a skylight installed into any rooms that do not have external windows or that are naturally dark, you will be surprised at the change it makes.

Fresh Paint

A fairly quick and easy way to improve the look of your house, while also adding value, is to repaint. New, fresh paint can have a big impact on how the house looks, both inside and out. It immediately makes the place appear brighter and newer and covers up any old stains or marks that may have appeared over the years. If you decide to do the painting yourself, it can be quite cheap too.

Other renovations that will improve the overall price range of the house include adding a second toilet, landscaping the backyard and the front-yard, upgrading floors that are old and worn and upgrading front entrances such as front doors and hallways.

And of course, last but not least is anything that improves on storage space. If you add additional cupboards or wardrobes around the house that can be used for linen closets or keep cleaning supplies out of the way, it will be much appreciated by potential buyers. If you don’t have the space to add cupboards, go up into your roof and see if you can build a storage area up there instead.

If you are unsure about any renovations you are about to take on, call your real estate agent in Melbourne or wherever your local one is based for a quick chat regarding your plans. They will be able to help you decide if you are moving in the right direction or not.