Mortgages are essential in our day to day lives. Most people rely on mortgages to finance the purchase of their homes or property. Were it not for the mortgage, two-thirds of the world population would be homeless. Homes are expensive to buy, and that’s why people look for alternative sources of finance, a mortgage being one of them. Mortgages come at a cost, in this case, interest. The interest imposed on a mortgage depends on several factors such as the repayment period, the amount borrowed, risk, and many more.
Let’s look at the tips to paying off a mortgage quicker.
Make Payments More Often
Some lenders allow borrowers to shift to fortnightly repayments (payment made every two weeks instead of monthly). Since interest on mortgages is adds up daily, making payments more often can help you to save a significant amount on interest in the course of your loan term.
Refinance Your Home Loan
If you review your home loan and find that it doesn’t meet your needs, then you may consider refinancing it. Talk to your current mortgage broker and request to have the interest rate reduced or move to a new lender who offers a lower interest rate, and this may help you to save and shorten the loan repayment period.
Make Additional Principal Payments
Most mortgage lenders allow borrowers to make monthly payments alongside additional payments marked as principal only, this payment is meant to pay down the principal other than the interest on the loan. Making additional principal payments does not only help you to save a significant amount in interest charges but also get you out of the loan before the expiry of the agreed period. So, commit yourself to making extra principal payments every month. For instance, if your monthly payments stand at $1500, you make it $1600 and dedicate the additional $100 as a payment on the principal. By doing so, you will be surprised at how your principal payments will add up faster, accelerating the mortgage payoff process.
Prioritize on Your Home Loan
Try to minimize your expenses as much as you can, and this will boost your savings in the long run. Always spend on things that are important to you and avoid unnecessary expenses.
It doesn’t make sense to pay for things you don’t need or overpay for things you do, so work on reducing your expenses. You can use the money you save on expenses to make additional payments on your mortgage and get out of loan sooner rather than later.
Look Past the Big Banks
Most people make mistakes by holding the opinion that only big banks offer better interest rates on mortgage, which is wrong. There are small lenders out there competing with big banks for your business.
By getting in touch with smaller lenders, you will realize that they offer some loan options, affordable interest rates, extended loan terms, and many more that larger financial institutions don’t. Having a variety of loan options means you’ll not miss out on one that is suited to your needs. Lower interest rates can help you to pay off your loan faster.
By embracing the discussed above tips, you will get out of your mortgage loan much earlier than expected.
Another benefit of paying down your mortgage balance early would be to set up yourself for appropriate eligibility with a future reverse mortgage. At age 62 you may qualify for a federally insured Home Equity Conversion Mortgage. This is a special type of loan available to seniors who wish to extract some of their earned equity and convert into a source of tax-free retirement income. Try the free Calculator found at ReverseMortgageReviews.org for an estimate of your available loan amount