When it comes time to pay your bills every month, odds are, you probably enjoy paying your mortgage the least. For most people, their mortgage is the biggest chunk that comes out of their paycheque every month, and being able to get rid of that payment would be a dream come true. While you may not be able to pay off your mortgage overnight, there are some tried and tested methods that you can use you eliminate your mortgage a little faster.
Pay Whatever You Can Extra
One way that you could pay down your mortgage a little bit faster is to pay whatever you can extra each month. When you make your budget for the month, and you have some left over, send it to the mortgage company. If you have more extra, send it. Even if you don’t think that you have that much to send, it can make a big difference when it comes to paying off your mortgage early. Anything that you can send will help out quite a bit. Even sending a small amount extra might take off a month of payments at the end of your mortgage. If in doubt, enter your adjusted overpayments into the mortgage calculator via We Know Money and see for yourself how much you can save.
Paying Once Every Two Weeks
Another strategy that you can use is making half of your regular mortgage payment every two weeks. This is also referred to as making biweekly payments. At first glance, it might not seem like this would do anything to help. In reality, it is a very effective strategy that can cut up to seven years off the end of your mortgage. Why does this work? It results in making an extra full payment every year. There are 52 weeks in a year, which means you’d be making 26 half payments or 13 full payments. This amounts to one more payment than the normal 12 payments that you would ordinarily send. Looking for more help? You can call Moreira Team today.
Sending a Lump Sum Payment
Depending on how you are paid, it might be more convenient for you to simply make an extra payment once every year. For instance, some employees received a Christmas bonus once a year, based on how much they sell. If you get a bonus, you can just send it right over to the mortgage company. Anything above what you owe for your monthly mortgage payment will be applied to the principal balance on the mortgage. This can really help you get the balance down to a much lower amount within a few years.
Pay the Principal for Next Month
Some people use a strategy that involves paying off the principal for the next month’s payment in this month. If you do this successfully, you be able to pay off your mortgage in half the time. The problem with this strategy is that it results in some pretty big payments later on. To make this strategy work, you’re going to need to get an amortisation schedule from your mortgage lender. This is a table that shows exactly how much principal and interest you are paying for each month of the loan. Every time you get ready to send your payment for the month, look at the table, and figure out how much principal will be paid next month. Add that amount to this month’s payment. Toward the end of this process, you’re going to be making twice the payment that you would ordinarily make.
Refinance Your Mortgage
The home loan market is incredibly competitive. If you’ve owned your property for some time then you should review your current home loan and compare it from the market. An in depth research and home loan comparison about what a new loan might look like, fees involved with refinancing will help you determine if securing a new mortgage loan makes sense in your situation or renegotiating your current rate with your existing lender may result in high savings.