"I think there is beauty in everything. What 'normal' people perceive as ugly, I can usually see something of beauty in it."—Alexander McQueen

"I think there is beauty in everything. What 'normal' people perceive as ugly, I can usually see something of beauty in it."—Alexander McQueen

mortgage contract

Effective Methods to Lower Interest Rates

As the years pass by, the more debt we accumulate. This is already a doozy enough on its own to manage but it becomes even more complicated when we factor in interest rates. Sometimes, it’s the interest that pushes the amount to the edge where it’s suddenly hard to keep up and you can be overwhelmed by payables left and right. Although you can’t disregard your interest altogether (in fact, that would be a bad idea), you can find a way to minimize it so that your payments can be more manageable within your timeline and budget.

Here are just a few things you can try to lower it and pay everything off more efficiently.

  • Refinance your mortgage

One of the most attractive reasons to go for refinancing in the first place is because it can lower the interest rate on an existing loan you have for your home. As with anything, this has its risk of pitfalls, but we will consider both the pros and cons.

First, this method has become much more accessible in recent times. You can even get mortgage refinancing nowadays, and it would still give you that significant reduction you are seeking out. Make sure you are aware of the general rates you are seeing, as this is more impactful when they are already low. You could end up getting a much more manageable loan this way and give you a way to have legroom in your cash flow. You’ll also want to consider if the refinancing timeline is feasible compared to your current one.

Another consideration to make here is how much the value is that you still have left to pay for. This can give you an idea of how much you can really gain from going this route. Overall, refinancing can be really helpful if you pick a provider that really has your back and can balance both the pros and cons, like better cash management for the risk of losing some equity.

  • Try to request for a lower rate

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Sometimes, all you have to do is ask. In many instances, it actually turns out that you can get a better deal than you already currently have. There are various factors that come into play on why this discrepancy may occur, either because you started your payments at a time when they had higher offers or otherwise. It is noted that most cards have variable interest rates, so this means that someone who got theirs at another time from you may have actually gotten a lower rate from the onset. This difference doesn’t necessarily mean you were cheated, but it does mean you are still catering to an outdated rate that you have the right to bring up.

You can get in touch with your credit card issuer and all you have to do is request a lower rate, that which they already offer others. This will likely lead to negotiations and some back and forth, but if you have a good credit score and you’ve shown historically on-time payments, you should have a better chance at getting the number you want. Financial experts suggest that you negotiate using the card you’ve had the longest since that gives you a lengthier track record. If this method doesn’t work, you can also ask for a reprieve that will allow you to have a lower rate for a set period of time before reverting to your current one.

  • Consolidate your debts

This option may result in a slight dip in your overall credit score for a little while, but it can be worth that if you are already overwhelmed with multiple debts and the interest rates continue to pound down on your finances. When you consolidate your debt, it can give you a lower total amount that you have to pay off, plus your interest rate for this new singular debt will likely be lower, too. It basically helps you out by giving you just one payment to worry about and it’s got savings on interest.

You can do this either by using a personal loan or a balance transfer card, though the pros and cons for each have minor differences. The latter has more flexible payments in exchange for a lower credit score, while the former has penalties for late payments and sometimes prepayment but can improve your credit and combine several payments.

It’s up to you to decide which of these methods work best for your situation, but it would be good to read up some more to learn each process more deeply. That way, you can see if you might even be able to manage two of the options together.

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