| Simple Tips to Pay Off Your Mortgage Faster
Your mortgage is likely the most significant financial burden on your budget. It’s a debt that, like most people, you want to pay off as quickly as possible to achieve financial freedom sooner. While it may seem like an uphill battle, following some simple tips can help you pay off your mortgage faster than expected.
Purchase a Home You Can Afford: Don’t stretch your budget beyond what is comfortable for housing expenses. Determine what you want to spend on housing by examining your monthly budget and avoiding what the bank tells you that you can afford.
Skip the Honeymoon Period: Avoid introductory rates that later switch to much higher variable interest rates. These loans often switch to higher-than-market interest rates with large refinancing/break fees.
Pay Down Other Debts First: Clear high-interest debts first, such as personal loans and credit cards. This saves money that can then be used to pay off the mortgage faster.
Hit the Principal Early: Paying extra above the minimum repayment amount is important, as compound interest affects the principal amount. The higher the principal amount, the less effect minimum required repayments have, so adding every dollar possible means paying interest on a smaller amount.
Pay Loan Fees and Charges Upfront: Avoid adding fees and charges to the loan, as they add to the principal, interest, and time it takes to pay off the loan. If possible, pay these upfront.
Pay Extra: Increase repayments to reduce interest accrued. This is the most effective way to pay off the loan faster, as even small additional payments add up substantially over the life of the mortgage.
Change Payment Frequency: Increasing payment frequency effectively saves interest, as interest is calculated daily and increasing payments means paying off more of the principal sooner.
Set Up an Offset Account: Linking savings or transaction accounts to a mortgage provides temporary principal reductions and reduces interest on the loan.
Don’t Waste Lump Sums: When coming into a lump sum of money, put as much as possible into the mortgage to decrease the principal amount owing and interest paid.
Don’t Lower Repayments When Rates Fall: Keeping repayments the same pays off the loan faster when rates fall.
Don’t Forget About Your Mortgage: Keep a constant eye on your mortgage and financial situation to ensure you’re on the best rate and package for your needs.
By following these tips, you can pay off your mortgage quickly, saving thousands of dollars and years of repayments.
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This is not meant to be financial or professional advice and is only of general nature. You must seek professional advice before taking any actions. The above information comes with no warranties whatsoever. We take no responsibility for any actions you may or may not take. All content is of general nature only and is NOT to be taken as advice whatsoever