Pay Off Your Mortgage Early & Save Thousands!
Choosing between whether you should invest, spend or pay off your mortgage each month can seem like a tough choice. Many people like an investment, and this can be useful if you play the stocks right.
But, paying early means you can save thousands on your mortgage; who wouldn’t want to save money?
So, while it might be tempting to use your money for other things each month, the truth is that using it for your mortgage gives you guaranteed savings. This means that over the long-term you and your family can be better off thanks to a mixture of getting the best mortgage rates and paying them off quickly and efficiently. Here are six tips to help you on your way:
- Prepay early – Early on in your mortgage’s life be sure to make extra payments. What you tend to find is that your rate is interest-heavy and the sooner it’s cut the better. Generally speaking, for five to seven years you will have the worst rates and by making the effort to pay more your equity will grow quicker.
- Annual payment – Each year, whatever way you are trying to do your mortgage, try to pay off a substantial chunk in a one-off payment. Whether you’ve received a bonus from work, got some inheritance or sorted out your tax rebate why not put it towards your mortgage? Granted, some loans prohibit this but if you check all the deals with rate supermarket first, you’ll be able to get one that opens you to flexibility.
- Prepay monthly – This is all about the principal reduction line. If you’re paying in June and July is $50, if you pay it now you’ll be one payment down and basically making an extra payment annually.
- Bi-weekly not always better – While this is all about getting value from your mortgage, it may seem backward to be wary of pitfalls within this. It will be faster and save money in theory, but a lender will often set an upfront charge which can offset any potential savings you could make.
- Extra payments flagging – Always be sure to handle extra payments properly. By maybe using a different check and putting a memo with it, both the lender and you know for mortgage and income tax purposes respectively.
- Knowledge is power – An old cliché that will always be true. Don’t forget about your mortgage and just pay it off because you have to, keep on top of things and have a look for new products and how interest rates are changing. For example, while you may have started with one mortgage, it is possible to ‘upgrade’ or move to another offering.
As we keep hearing, the recession hasn’t fully gone and while this is all good in theory and can save you the best part of six figures based on a 30-year mortgage it isn’t always possible. But, with the right expenses tracking, hard work and determination you can get to the point where paying off your mortgage quickly is a breeze. Use the right online directories and you’ll be able to get the best rates, advice and products at your fingertips.