Owning a home can be very expensive. Many homeowners have to take out a mortgage in order to finance the purchase of their property. Although mortgages are not uncommon, the truth is, everyone wants to pay them as soon as possible, as being in debt for long periods of time can cause stress, especially when unexpected expenses arise. That is why many people look for ways to pay off their mortgage quicker. Paying off your mortgage in a shorter time frame is not as challenging as it sounds, and many times does not require you to register for accelerated mortgage payments from your lender.
The first thing you should do before making additional payments on your mortgage is to check with your lender to see how they process early repayment. While some lenders allow extra payments, others may have penalties or may have rules in place that restrict additional payments to only certain times of the year. Once you know how your lender handles these cases, then you will have an idea of what the best way to approach early repayment.
Strategies that You Can Use to Repay Your Mortgage Faster
Many homeowners are unaware that most of their monthly payments cover the interest and only a small portion of their principal balance. You can remedy this by making additional payments that are specifically for the principal. This will not only reduce your interest but will also allow you to pay off the balance faster than anticipated.
Below we highlight three strategies to help you pay off your mortgage faster:
- Biweekly Payments: One of the most effective ways to pay off your mortgage is to set up biweekly mortgage payments. The required monthly payment will be divided into two, which won’t impact your monthly budget. The additional payment can significantly reduce your principal balance over the years.
- Make Additional Payments During the Year: Another option is to make additional full payments on your mortgage every quarter of the year. If that does not work with your budget, then you’ll want to consider adding a small amount ($20-50) to your monthly payments, which adds up over time.
- Reduce Any Unnecessary Spending: Look at your monthly expenses, and limit any unnecessary spending that you notice. That extra money that you have at the end of the month can be put towards your mortgage.
The best way to approach paying off your mortgage is to have a set goal and plan in place. For all of your mortgage needs or questions, contact the Lending Experts. We gave the knowledge and expertise to walk you through getting and securing a mortgage that you will be comfortable with.
Related: Five Tips to Improve Your Credit.. To Help You Get a Mortgage.