Leveraging Your Bonuses for Your Home Purchase
Bonus incentives are a popular language in the corporate world, as several companies use them to increase performance and results. Using this extra money on your mortgage bond can be a smart financial move as it can save some dollars on interest and reduce payment duration. Some lenders allow bonuses towards your maximum loan amount and may cap the usable bonus at 65% for safety.
The Enduring Popularity of Bonuses
The concept of bonuses has been ever-present with several different kinds gaining popularity over the years. It’s noteworthy to mention that bonuses are not only used to encourage employee performance but also to attract new customers and retain existing ones. With the widespread adoption of the internet, participants in different industries can now easily access information about different types of bonuses and where to find them.
In the casino industry, for instance, players can find expert reviews on perks like no deposit bonuses and casinos offering them on affiliate sites. On these sites, players can see what they said about the bonus offerings and use that information to make informed decisions. While claiming any bonus has potential benefits, reading and understanding the terms and conditions is always important.
How Lenders View Bonus Incomes
Mortgage rules will vary from one lender to another. For instance, some may allow you to overpay up to 10% of your balance annually, while others may not. Furthermore, most lenders prefer guaranteed bonuses over performance-based ones due to their unpredictable frequency and value. Seeking the right help from an independent broker allows you to find the most suitable products at competitive rates.
Lenders consider different factors before they can allow you to use bonuses to offset your mortgage. They will assess your earnings value and how recurrent they are. Consistent earnings are more likely to attract favor from the lender, as they could be a sign of stability. Your payslip should also speak for itself, showing a record of recent bonuses you have been receiving. If the industry you work in is perceived as trustworthy, then you are likely to use your bonus to offset your mortgage due to the reliability of the bonus structures.
Benefits of Using Bonuses for Your Mortgage Payment
Paying extra on your mortgage will reduce the interest paid over the loan’s lifetime. The principal balance of your mortgage bond is what determines the amount of interest you pay. By using your bonuses to pay more towards the principal balance, you reduce the overall interest amounts to be paid on the loan.
Utilizing bonuses accelerates mortgage equity by injecting lump-sum payments into the principal. Home equity is the difference between the property’s market value and the outstanding mortgage balance. Applying bonuses to mortgage payments lowers the interest accrued over time, enabling a greater portion of subsequent payments to contribute to principal reduction. This efficient reduction results in an expedited home equity build-up, which is beneficial, especially if you plan to re-sell the house.
Bottom Line
With many employers offering dynamic bonus structures to encourage performance, employees who seek to be homeowners stand a great chance to benefit. Using these bonus incentives on mortgages can significantly reduce the loan tenure, which is the time needed to settle the loan, and build equity faster. The monthly payments are reduced once the mortgage is paid faster, freeing up your money for other financial goals.
