Once you have successfully purchased the home of your dreams, all you are left with is paying off the mortgage. Your mortgage is a stressful commitment that you will have to deal with for several decades. It doesn’t always have to be that way, there are things you can do to pay off the loan early and invest you income in other reliable investments. Here are some ways you can free yourself off decades of mortgage payments.
With the help of your mortgage broker, change your monthly payments to biweekly payments. Biweekly payments involve you paying half of the monthly payments every two weeks. When you make payments this way, you find your total yearly payments are more than when you made monthly payments.
Take a mortgage you can afford to pay off. Mortgage lenders pre-qualify you by comparing your income and monthly spending. The amount of loan they offer may fit your financial status on record, but may not fit your personal monthly budget. If you feel like the offer will strain your income, go for a lower loan amount. This way you can have disposable income in excess to pay off your loan in large quantities.
Clear off other debts before taking on a mortgage. Multiple monthly commitments can be overwhelming on you and your salary. Take the time to pay off extra debt before applying for a mortgage. It may be time consuming but the rewards are great. With only mortgage in your credit you will be able to pay it in huge amounts and therefore clear the loan faster. The other advantage of clearing your debts first is that lenders will issue your loan with lower interest rates.
The most common mistake that home owners make is ignoring the principle payments. While you are on an interest only payment method, you are required to cover the interest rates in your monthly payment plan. There are no laws concerning early payment of the principle amount. You should create a savings account where you put in a year’s savings and pay it off to the principle payment at the end of the year. You will be surprised how much this will reduce the principal amount a few years down the line. Another benefit of paying off the principal amount is that you will reduce the interest accumulation and end up paying a lower mortgage overall.
Refinance your long-term mortgage payment into a short-term fixed rate payment method. The short term mortgage payment reduces your interest together with the period you are required to make the payments.
Dedicate all your money and savings into paying off the loan. If you don’t have strict commitments like school fee or loans, you can dedicate your monthly expenditure into the mortgage. Sacrifice all your luxuries. You can afford to miss a vacation and a concert for a little while, it may sound selfish on my part but it is guaranteed to help you pay off your loan fast.