You can take advantage of low interest rates based on the choices that you make to improve your current financial situation. Here are the top four steps that can help you save money on your mortgage, reduce your monthly expenses, reorganize your savings plans, or enhance your lifestyle:

1. Refinance your mortgage

If you purchased a home when interest rates were higher, by taking a new mortgage at a lower rate, you would be able to drastically cut your monthly mortgage payment.

As per your credit rating, the interest rate you apply for may vary. If your current mortgage is around 6% or higher, you might be able to gain significant savings by refinancing, especially if you intend to stay in the same home for several years. Although, there is one important variable to take into account: closing expenses, which is the fees you pay to process the loan to the financial institution. An alternative option is to take a 15-year mortgage, which usually comes with a lower interest rate compared to 30-year mortgages.

While with a 15-year mortgage, your monthly repayments may not drop, the shorter term will allow you to close your mortgage quicker while paying significantly less on interest payments.

2. Choose a fixed-rate mortgage

You may consider choosing a fixed-rate mortgage over a lower interest adjustable-rate mortgage. This is a great option if you’re planning to buy a house and intend to live there for several years.

While an adjustable mortgage rate will save you money in the short term, the rate will increase along with the market, and potentially spike as interest rates start to go up in the future. Conversely, a fixed-rate mortgage, the rate is locked in for the whole pay-off period.

If you’ve already opted for an adjustable-rate mortgage and intend to stay in your home for several years, you may consider refinancing to lock-in a fixed rate. Although the fixed-rate, for now, will be marginally higher than the floating rate, and you will be expected to pay closure costs down the line, if interest rates increase, you will be happier that you made the move.

3. Invest more rather than paying off your low-interest mortgage and loans early

To decrease the number of years needed to pay off the debt, customers are often encouraged to pay extra for their monthly mortgage. But you may want to think twice about spending more on your monthly mortgage if you need to plan for a new car, an education fund for your kids, house renovations, your retirement fund, or some other major expenditures. If you already have a competitive-rate mortgage, you may consider saving your extra money to accomplish other financial goals, instead of paying off your mortgage quickly.

4. Buy a home

Though mortgage rates in many parts of the world have been rising, in the current environment, this could be a good time to purchase your first home or move to another home that fits your needs better. You will be able to lock-in a mortgage at one of the lowest prices in several years by investing now.

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