Purchasing a home is a significant financial commitment and managing your mortgage effectively can lead to substantial savings over time.
There are smart ways that provide practical strategies to help borrowers effectively manage and reduce interest payments, while enhancing long-term financial well-being.
Remember that maintaining a comprehensive budget is essential, covering not only mortgage payments but also other housing-related expenses such as property taxes, insurance, maintenance and utilities.
Additionally, building an emergency fund is imperative to address unexpected costs like job loss or major home repairs.
Regular reviews of the mortgage and overall financial situation, consulting with mortgage advisers, ensuring adequate insurance coverage, taking advantage of prepayment options and maintaining good credit hygiene are all vital practices to manage mortgages effectively and achieve long-term financial stability.
Here’s a breakdown of key points to consider.
1. Refinance with a lower interest rate
One strategy recommended is refinancing, which involves replacing your existing mortgage with a new one at a lower interest rate.
By checking and improving your credit score, you may qualify for better rates.
Lower interest rates can significantly reduce your monthly payments, providing tangible savings over the entire loan term.
However, it is important to note that there fees are applied when refinancing a mortgage.
2. Eliminate mortgage insurance premiums
Another tip is to eliminate mortgage insurance premiums provided you have decent existing cover.
This reduction in monthly expenses allows you to contribute the saved amount towards higher principal recovery, effectively decreasing the interest component of your mortgage payments.
This strategic move not only eases financial burdens but also accelerates the equity building process in loan repayment.
At the same time, we need to acknowledge the value of mortgage-related insurance and take an informed decision only if you already have adequate cover.
Life insurance is a safety feature for home buyers and banks as well. It protects the borrower’s legal heirs and bank in case of an unfortunate event of the borrower’s death or permanent total disability.
In such events, the whole mortgage obligation is settled by the insurance provider with the bank and property becomes free from financial obligation.
Similarly, in property insurance, if there is a natural calamity such as earthquake, flood or any "act of God" and the property is no longer habitable, insurance companies are obligated to settle the outstanding loan with the bank.
3. Debt restructuring
This process typically involves negotiating with creditors to either reduce the principal balance through lump-sum payments or adjust the repayment terms to better align with the borrower's current financial situation.
One aspect of debt restructuring involves making lump-sum part payments towards the outstanding principal balance.
By doing so, borrowers can effectively reduce the overall amount owed, which not only decreases the financial strain but also accelerates the journey towards debt freedom.
These lump-sum payments can come from various sources, such as savings, investments or even asset sales.
Additionally, debt restructuring may entail renegotiating the terms of the loan, such as extending the repayment period, lowering the interest rate or converting variable-rate loans into fixed-rate ones.
These adjustments are made based on the borrower’s ability to repay, ensuring that the revised terms are more sustainable and conducive to long-term financial stability.
By engaging in debt restructuring, borrowers can actively manage their financial obligations and regain control over their economic well-being.
4. Switch to a fixed-rate mortgage
For borrowers with adjustable-rate mortgages, switching to a fixed-rate mortgage could be an option.
This transition provides greater stability and predictability in monthly payments, shielding you from potential interest rate fluctuations in the future.
However, they do come with fixed terms and homeowners will need to reassess this option before it expires as the interest rate could increase and affect payments.
5. Interest offset option
Linking a savings account to your mortgage for an interest offset is another savvy strategy.
This allows you to cut down the interest part from a loan repayment using the balance in your savings account.
The result is a reduction in effective interest rates while maintaining liquidity, providing a balanced approach to mortgage management.
6. Interest hedging through SIP
Consider systematic investment plans (SIP) as a tool for disciplined and regular investments.
SIPs can act as a hedge against rising interest rates, offering benefits such as risk mitigation and consistent savings.
Switching to a fixed-rate mortgage provides greater stability and predictability in monthly payments
Rajender Prasad,
managing director, Money Maestro
7. Accelerated loan repayment
Gradually increasing your repayment by a certain percentage, even if it's a modest 2 per cent to 3 per cent, can have a cumulative impact over time.
This ensures that your loan payments keep pace with your income growth, allowing you to allocate more funds towards the principal amount.
8. Regular partial settlements
Lastly, it’s crucial to highlight the importance of regular, small partial settlements.
Making one additional instalment annually as a partial settlement contributes not only to consistent progress towards debt, but also cultivates financial discipline and leverages the power of compounding.
This approach aligns with long-term savings goals and reinforces a proactive approach to mortgage management.
Rajender Prasad is managing director of Dubai-based independent mortgage advisory firm Money Maestro
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
'Panga'
Directed by Ashwiny Iyer Tiwari
Starring Kangana Ranaut, Richa Chadha, Jassie Gill, Yagya Bhasin, Neena Gupta
Rating: 3.5/5
Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
Afghanistan fixtures
- v Australia, today
- v Sri Lanka, Tuesday
- v New Zealand, Saturday,
- v South Africa, June 15
- v England, June 18
- v India, June 22
- v Bangladesh, June 24
- v Pakistan, June 29
- v West Indies, July 4
Top goalscorers in Europe
34 goals - Robert Lewandowski (68 points)
34 - Ciro Immobile (68)
31 - Cristiano Ronaldo (62)
28 - Timo Werner (56)
25 - Lionel Messi (50)
*29 - Erling Haaland (50)
23 - Romelu Lukaku (46)
23 - Jamie Vardy (46)
*NOTE: Haaland's goals for Salzburg count for 1.5 points per goal. Goals for Dortmund count for two points per goal.
FA Cup quarter-final draw
The matches will be played across the weekend of 21 and 22 March
Sheffield United v Arsenal
Newcastle v Manchester City
Norwich v Derby/Manchester United
Leicester City v Chelsea
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Rock in a Hard Place: Music and Mayhem in the Middle East
Orlando Crowcroft
Zed Books
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UAE currency: the story behind the money in your pockets
Director: Romany Saad
Starring: Mirfat Amin, Boumi Fouad and Tariq Al Ibyari
EA Sports FC 26
Publisher: EA Sports
Consoles: PC, PlayStation 4/5, Xbox Series X/S
Rating: 3/5
Empire of Enchantment: The Story of Indian Magic
John Zubrzycki, Hurst Publishers
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Where to donate in the UAE
The Emirates Charity Portal
You can donate to several registered charities through a “donation catalogue”. The use of the donation is quite specific, such as buying a fan for a poor family in Niger for Dh130.
The General Authority of Islamic Affairs & Endowments
The site has an e-donation service accepting debit card, credit card or e-Dirham, an electronic payment tool developed by the Ministry of Finance and First Abu Dhabi Bank.
Al Noor Special Needs Centre
You can donate online or order Smiles n’ Stuff products handcrafted by Al Noor students. The centre publishes a wish list of extras needed, starting at Dh500.
Beit Al Khair Society
Beit Al Khair Society has the motto “From – and to – the UAE,” with donations going towards the neediest in the country. Its website has a list of physical donation sites, but people can also contribute money by SMS, bank transfer and through the hotline 800-22554.
Dar Al Ber Society
Dar Al Ber Society, which has charity projects in 39 countries, accept cash payments, money transfers or SMS donations. Its donation hotline is 800-79.
Dubai Cares
Dubai Cares provides several options for individuals and companies to donate, including online, through banks, at retail outlets, via phone and by purchasing Dubai Cares branded merchandise. It is currently running a campaign called Bookings 2030, which allows people to help change the future of six underprivileged children and young people.
Emirates Airline Foundation
Those who travel on Emirates have undoubtedly seen the little donation envelopes in the seat pockets. But the foundation also accepts donations online and in the form of Skywards Miles. Donated miles are used to sponsor travel for doctors, surgeons, engineers and other professionals volunteering on humanitarian missions around the world.
Emirates Red Crescent
On the Emirates Red Crescent website you can choose between 35 different purposes for your donation, such as providing food for fasters, supporting debtors and contributing to a refugee women fund. It also has a list of bank accounts for each donation type.
Gulf for Good
Gulf for Good raises funds for partner charity projects through challenges, like climbing Kilimanjaro and cycling through Thailand. This year’s projects are in partnership with Street Child Nepal, Larchfield Kids, the Foundation for African Empowerment and SOS Children's Villages. Since 2001, the organisation has raised more than $3.5 million (Dh12.8m) in support of over 50 children’s charities.
Noor Dubai Foundation
Sheikh Mohammed bin Rashid Al Maktoum launched the Noor Dubai Foundation a decade ago with the aim of eliminating all forms of preventable blindness globally. You can donate Dh50 to support mobile eye camps by texting the word “Noor” to 4565 (Etisalat) or 4849 (du).
Lexus LX700h specs
Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor
Power: 464hp at 5,200rpm
Torque: 790Nm from 2,000-3,600rpm
Transmission: 10-speed auto
Fuel consumption: 11.7L/100km
On sale: Now
Price: From Dh590,000
