Paying off your mortgage faster can seem like a daunting task, especially if you have a large mortgage or are on a tight budget. However, with a little bit of planning and some smart strategies, you can make a significant dent in your mortgage balance and save thousands of dollars in interest payments over the life of your loan. Here are some tips to help you pay off your mortgage faster.
1. Use an offset account
This is by far and away the best way to pay off your loan faster. Interest is calculated daily on the net balance between your loan and offset account. This accrues and is charged to your loan account monthly. By maintaining a positive balance in your offset account (by having your salary paid into it for example), you will reduce the amount of interest charged and increase the amount of debt paid off every month.
2. Make additional payments
If you don’t have an offset account you can still reduce your debt faster by making additional repayments. Not only will this reduce the principal outstanding it will also reduce the interest charged every month. Additional repayments can also be redrawn without charge (subject to lender policy).
3. Refinance your mortgage
Refinancing your mortgage can be a great way to pay it off faster. By refinancing to a lower interest rate, you can lower your monthly payments and use the savings to make extra payments on your mortgage. This can save you thousands of dollars in interest payments and help you pay off your mortgage faster.
4. Consider a shorter loan term
Another option to consider is a shorter loan term. Instead of a 30-year mortgage, consider a 25-year mortgage. While the monthly payments will be higher, you will pay off your mortgage faster and save a significant amount of money in interest payments.
5. Increase your income
Increasing your income can also help you pay off your mortgage faster. This could mean getting a raise at work, starting a side business, or renting out a room in your home. The more money you have, the more you can put towards your mortgage each month.
6. Cut your expenses
Finally, cutting your expenses can also help you pay off your mortgage faster. This could mean cutting back on unnecessary expenses like dining out or subscriptions or finding ways to save money on necessities like groceries or utilities. The more you can save, the more you can put towards your mortgage.
Paying off your mortgage faster may seem like a daunting task, but with a little bit of planning and smart strategies, it is definitely possible. By making bi-weekly payments, making extra payments, refinancing, considering a shorter loan term, increasing your income and cutting your expenses you can make a significant dent in your mortgage balance and save thousands of dollars in interest payments over the life of your loan. Always consult with a mortgage broker before taking any drastic steps and make sure you fully understand the terms and conditions of your mortgage.
In conclusion, paying off your mortgage faster can be a great way to save money in the long run, and it is definitely worth considering. With the right strategies, you can make a significant dent in your mortgage balance and save thousands of dollars in interest payments over the life of your loan. So, start planning and make your dream of owning your home outright a reality. Schedule a consultation today, don’t wait to get the help you need.
