A mortgage is the biggest financial commitment a person is likely to have in their life. The amount of money paid over the lifetime for a mortgage is huge, as you would expect in buying a home, so it makes sense to look for ways to reduce the amount of money being spent on the mortgage and the length of time over which the mortgage is paid.

For many homeowners, being able to pay off a mortgage early is an important aim in life because it would provide a sense of freedom and confidence. Knowing that your home is fully owned by yourself is a great feeling, providing short and long term benefits to a property owner.

Paying off your mortgage early makes sense

If you pay off your mortgage at a faster rate, you pay less money in interest. When you think that the majority of mortgages last between 20 to 30 years, there is a lot of money being paid out on interest over the lifetime of the mortgage. Many property owners do not think about the long-term savings when they are paying every month, but over the course of the loan, being savvy with mortgage payments can transform the amount of money a homeowner must spend.

These savings could allow people to book holidays, buy a car, study, or make several life-changing decisions and purchases. All homeowners should seriously consider paying off their mortgage early and the benefits they will receive for doing so.

Here are five tips that help homeowners to pay off your mortgage early:

·         Refinance your home loan with a shorter-term mortgage.

·         Make an additional mortgage payment on an annual basis.

·         Make a bi-weekly payment to your mortgage.

·         Remove a Private Mortgage Insurance (PMI) plan – after having paid down some of the mortgage.

·         Take advantage of a windfall.

By choosing at least one of these five tips, homeowners will be able to pay off their mortgage earlier. The homeowner’s personal circumstances will have an impact on what option is right for them, but many people find that refinancing their home loan is attractive, and actually easier than they initially thought.

By using a home loan repayment calculator, you can quickly determine if you find a better rate and make your money work harder for you. A homeowner can clear off their mortgage at a faster rate if more of their money is being used to pay off the mortgage and less on interest. There is a lot to be said for making your money work smarter, and this makes this step a sensible one for many property owners.

Switching to bi-weekly payments is a good idea because doing so will provide 26 half payments (equivalent to 13 monthly payments) instead of 12 monthly payments, which means you will pay off more. Taking this step or using any spare or new-found money to reduce the mortgage deficit can help to pay the loan off at a faster rate.

Paying a mortgage off earlier offers so many benefits for a property owner, and there are a number of simple steps that can make this aim easily achievable.

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Author

  1. avatar
    Elizabeth Smythe