Ways To Repay Your Mortgage Faster And Save Plenty Of Dollars
Amongst the most major accomplishments which a person can make is to own their very own home outright. You would save more money on interest the faster your mortgage is paid off. You can take years off your loan by taking several easy steps that would help make sure you are paying off your mortgage as effectively as possible. The best part is, this process is completely free.
1. The first thing you should do is shop around for the best mortgage you can obtain with your credit score. The ongoing service fees that the mortgage firm charges are usually reasonable, but it is wise to know precisely what fees will be charged before you finalize a loan. It might be in your best interests to talk to a mortgage broker at this time.
2. Choosing either weekly, bi-weekly, or monthly payments is the next step. A bi-weekly mortgage means that payments would be required 26 half-monthly payments rather than 12 monthly payments. Nevertheless, you will save a considerable amount on interest. It is important to remember that if your mortgage is originally set up as bi-weekly, your lender could charge you an upfront fee of $300-$400.
For example: if you make a payment of $415 twice a month rather than a monthly payment of $830, you would save approximately $27,000 in interest and could own your own home roughly 4-1/2 years faster.
3. Paying a little bit more every month is the third step. Slight increases in dollars will help reduce the total principal still owing. If you could pay an extra 10-15% percent each and every month then you will be in a good position to pay off your mortgage faster.
Like for instance: By upping your payment from $830 to $1000 each and every month, you could save almost $48,000 in interest and pay off your loan 8 years early.
4. If you make a lump sum payment once a year, using your tax refund, work bonus, or whatever extra money you have shaved up, you can decrease the amount remaining on your principal by a substantial amount. It is better to check your mortgage documents to see how often you are permitted to prepay and in what amount to be able to make certain that you will not be subjected to any extra fees. While nearly all mortgage loans do not prohibit you from paying off your loan early, some loans do have parameters concerning any extra payments that you can make.
5. At renewal time, it is better to pay off as much of your remaining mortgage as you could. At renewal, you could pay off as much as you want as most mortgages become open.
6. Make sure that you check your mortgage payment to ensure that your additional payments are being placed straight against the principal. It is essential that the bank accurately documents each payment that you make. Any additional payments that you make must be done using a separate cheque. On the memo line, make sure you note that they payment should be applied just to the principal. At the end of the year, when doing your taxes, tally the payments and make certain that the entire amount which you paid has been accurately applied.
7. The last step to follow is to make certain that you are informed and staying current about your mortgage. New products are coming out each and every year and the interest rate is always changing. There is the possibility that you may want to shop around for a better product as time goes on.
For example: You might only qualify for a lower-rate adjustable mortgage in the beginning. At some point later on, you may decide to choose to a more long-term affordable fixed-rate mortgage.
It is not always in your best interest to pay off your mortgage faster. For instance, some people may choose to invest in mutual funds when the yields return 10 to 12 percent every year. Normally, the majority of people decide to pay off their mortgage instead.
Another good time to avoid investing money is if you have plans to move in the near future. Saving your money and utilizing it for a down payment on your new home may be better then investing money into your current house.
It is quite possible for you to save thousands of dollars on your mortgage just by following these simple steps and by doing a little research. Nonetheless, the banks will not tell you how to save money because that would make them lose money and their profits would come to a halt.
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