Like most people, you might be looking into ways of paying off your mortgage and get out of debt fast. It takes discipline and a focused effort to be mortgage-free.
Hence, here are some secrets we’d like to share with you to pay off your amortization quickly:
1. Consider making bi-weekly mortgage payments.
Instead of paying one full payment for one month, why not split the monthly payment in half and send it over every two weeks? At year-end, you’ll end up making 13 months’ worth of mortgage payments. This can already help cut your loan term by a couple of years.
Take note that some lenders accept bi-weekly payments, but not all. Check with your lender if they accept this payment setup.
2. Add an extra amount for the mortgage loan principal.
Your monthly mortgage payment does not fully go to the principal amount you’ve borrowed. It is usually allocated into different areas, including the principal, interest, and applicable insurance, among others.
You can add in a bit of extra into your monthly payment. For instance, if your monthly payment is $615, make it $650, if you can. You can even save up for a full month’s worth of extra repayment. Doing either helps reduce the principal amount, thereby also reducing the interest and the mortgage term.
But, make sure to have extra payments applied to the principal. Inform your lender about this.
3. Refinance your mortgage.
Refinancing your loan can help reduce the amount of interest you will be paying. Doing so can lead to significant savings.
When you apply for a new loan for refinancing your mortgage, keep in mind that your monthly payments will be higher. But, the total interest over the loan term will be lesser. You also get to pay off your loan quickly.
4. Redirect extra funds to mortgage payments.
What do you do with your bonuses? Do you spend them right away? How about using them to make your home loan payments? This will be a better use of your extra cash.
At the same time, eliminate vices in your life. The money you spend on vices such as cigarettes and too much alcohol, among others, could have been spent to pay off your home loan.
5. Don’t reduce repayments when interest rates are low.
It can be tempting to lower your monthly payments when interest rates are falling due to the extra cash you can pocket. Maintaining your current repayment amount will help reduce the principal loan amount. If the interest rates continue to drop, you get to pay off the debt in no time!
There surely are ways on how you can be mortgage-free quickly. But, you need to be disciplined with how you make your mortgage payments.
Need help with your mortgage? Schedule a consultation today so we can discuss viable solutions.