A mortgage is a debt. Therefore, failure to pay on time can cause you massive problems and drive you into stress. The idea of paying off all your mortgage can be pretty unnerving. There is a need to formulate a plan on how to go about the whole repayment process. So, how can you pay off your mortgage quicker?
Having no plan means you will be less likely to live a debt-free life as you will be having issues with your lenders for failing to submit your periodic payments. If you become trapped in a bad cycle of debt and you cannot make loan payments, the banks can opt to sell your home to recover any capital. Don’t be in debt all your life, or risk losing your dream home. Instead, pay your debts off quickly and live financially free.
The following are some free and easy steps you can take pay off your mortgage quicker
Refinancing your home loan
During your financial analysis and review, you may find out that your home loan doesn’t meet your needs. In such a situation, you will need to consider refinancing your mortgage. Bargaining your current rates with your already existing mortgagees or shifting to a new lender that offers a lower interest rate may bring about an increase in savings and help cut down the duration of your principal and interest loan.
Switch to a biweekly payment
As an alternative to one monthly fee, you can submit a half-sized payment every two weeks. What I mean is that, if your average mortgage amount per month is $10000, you will pay $5000 every two weeks. The impact on your budget for this mode of payment remains the same as that of one monthly payment. The only difference is that a biweekly payment schedule will lead to an increase in the annual full-sized amount by one (13) instead of the usual 12 out of the 52 weeks of a year. The concept behind this idea is that you will be making an extra payment every year without soliciting around for the additional capital.
Make your mortgage priority
You can secure a debt-free lifestyle much sooner by using the extra cash to make supplementary payments on your mortgage. There is no sense in paying for things you don’t need
Make more recurrent payments
Since interest on mortgages is calculated daily, submitting payments more frequently may aid in reducing the interest you clear over the term of your mortgage so that sooner you are a debt-free person. Take advantage of your lenders policies as some lenders may allow you to shift from monthly payments to fortnightly repayments.
Maintain the steadiness of your repayments
Interest rates can decrease. You should keep repaying your mortgage even when the prices are higher. When the rates are lower, the excess money will come off your principal, and this money can support you pay off your mortgage quickly.
Assess the market
There is always competition in the market. In a tight market, your mortgagees will still compete for your enterprise, so you should take some time every year to do a mortgage check and find out what promotions are out there. Don’t just sit and forget about your mortgage. There is always an opportunity to save. Take it.
Dedicate any Bonuses into your mortgage
How much you pay towards your unsettled principal balance matters can play a large role in reducing your overall balance.
Over time, you might find yourself with extra funds and lack a better way to put it into use. Situations under which you can find yourself with excess funds include; a bonus from work, tax refund, and inheritance. Choosing to dedicate these funds to your mortgage payment means serious progress towards your mortgage.
Make use of a mortgage pay off loan calculator
A Loan calculator can be an excellent tool for assessing how long you have until your financial freedom. The calculator can be used for other debt types as well, and it is not just limited to how to pay off your mortgage quicker.
Focus beyond big banks
Big Banks fund and support small banks. Unlike most big banks, smaller banks are ready to compete for their customers harder.
Other than personalized services they offer, most smaller lenders offer mortgage options the big lenders don’t. These options typically include lower interest rates, flexible loan terms, higher lending ratios and lower ongoing loan rates. Above all, alternative lenders are more empathetic to your financial needs.
Consider Downsizing
Shifting from a large house to a relatively smaller one is a harsh step. Nevertheless, if you are determined to pay off your mortgage ultimately, consider selling off your large house. Use the profits gained to purchase a smaller, less expensive home and pay part of your mortgage charges.
The profits you get from selling your bigger home may allow you to pay cash for a new house ultimately. Similarly, you can decide to go for a smaller mortgage. Either way, you will have succeeded in reducing your debt. The lower your balance, the quicker you can pay.
Take Away
Paying off your mortgage quicker is usually a sensible decision. Over the mortgage term, It can save you thousands of money in interest payments. Quickly take a look at all the above steps on how to pay off your mortgage quicker and expect to be among the debt-free persons sooner.
