Starting to feel like you may never finish paying off that mortgage? You’re not alone. With long amortization periods, it’s hard to see an end to the payments. But if you’re ready to pay your mortgage back in less time and reduce your stress, read on.
Here we provide you with five clever ways you can kick those mortgage payments into overdrive and free yourself from financial burden.
Here’s a quick trick that few people know about. Paying bi-weekly instead of monthly will allow you to pay an extra two payments worth at the end of the year. This will save you thousands of dollars in interest costs and help you pay down your mortgage at a much faster rate. When you account for it in your budget, you won’t even notice.
If your mortgage lender will allow you to round up your bi-weekly or monthly payments to the nearest hundred, then you can pay back your mortgage even faster. For example, if you have a monthly rate of $865, round it up to $900 per month. The extra money will go directly into your principal instead of into your interest rate (as interest rates are locked in through your amortization schedule). This means you’re paying back more of the actual money you owe as opposed to the interest on the loan.
Lump Sum Payments
Anytime you receive a work bonus, a tax refund, a raise, or any extra income, you should be putting it towards your mortgage. As the money isn’t part of your normal budget, it’s probably not accounted for and you won’t necessarily miss it. Any lump sum payments you are allowed to make should go to paying down your principal and reducing your mortgage balance.
You should always know when your renewal date is, and plan to discuss your options well in advance with your lender. Also, do the necessary research and stay current on the latest fluctuations in interest rates and market factors. Planning enough time allows you to shop around for better interest rates, and gives you the opportunity to negotiate with your current lender before making any final decisions. You could obtain a much lower rate than before, saving you thousands of dollars down the road.
What if you could free up more money every month? If you have other debts that are holding you back from making more frequent payments to your mortgage, then maybe it’s time to consider consolidating all your loans into one. Debt consolidation can help you to achieve one low interest rate with one monthly payment. This can help free up more money to pay down your mortgage faster.
A mortgage is often the biggest loan people have. And paying it down faster will cut down the interest rates and also cut down on the financial burden, freeing up more money for you in the long run. For more clever ways to reduce your mortgage faster, talk to Financial Forum about all the options available for you.