Follow These Tips to Pay Your Mortgage Faster
If you have a mortgage that stretches over a long period of time, you may feel like you’ll always be making repayments. However, by using different strategies that don’t generally require spending a lot of money, you can slash the time it takes to clear your mortgage payments.
Some of the fastest ways to pay off your mortgage faster include the following tactics:
Make Two Payments Every Month
Split your monthly mortgage payments into half and pay them once every two weeks. You would’ve made around 26 payments by the end of the year. By using this strategy, you can shave four to six years off a typical 30-year mortgage loan.
Depending on the interest rate and loan amount, biweekly payments can cut one to three years from the repayment time on a 15-year mortgage. However, not every lender will accept biweekly payments, so check with your lender whether it accepts these payments and if yes, then how they would be processed.
Budget for An Extra Payment Every Year
If you don’t want to get hassled with the system of biweekly payments, you can make an extra payment every year to get similar savings. A bonus or tax refund may help you get the cash for using this strategy. If you make extra payments annually, you may be able to reduce your term of repayment by almost seven years.
Put Extra Money Towards the Principal Every Month
Consider putting an additional amount towards the principal every month if you can’t afford extra payments on a yearly basis. If you lack the discipline to save, prepaying mortgages are the best way to go about clearing your debt faster. You can add $100 to the payment amount, or round up your regular payment to the next hundred dollar amount to make record-keeping easier. Make sure that this additional amount is applied to the principal to reduce your interest and mortgage term.
Some other tactics that you can use to pay off your mortgage faster are recasting your mortgage, choosing a flexible term mortgage, refinancing your mortgage, and considering an adjustable-rate mortgage.
