If you have a 30-year mortgage, paying it off early can save you thousands of dollars in interest. Here are some tips to help you repay your mortgage faster and relieve yourself from one financial burden.
Make Fortnightly Payments
Instead of paying monthly, switch to making fortnightly repayments. For example, if you pay half the monthly repayment amount every two weeks, you’ll end up making an extra month’s repayment every year.
Pay Extra
Making extra repayments on your loan cut helps you repay your loan faster, sometimes by years. If you can, put your tax refund and any bonuses towards your home loan can save you thousands of dollars in interest. However, some loans don’t allow you to make extra repayments without charging a fee. So before you make extra repayments, make sure the conditions of your loan will enable you to.
Switch to a Lower Interest Rate
If your interest rate is high, refinancing with another lender for lower interest rates can shorter the life of your loan. You can pay the same amount every month, with any extra going towards your interest.
Get an Offset Account
An offset account is a type of savings account linked to your mortgage. The balance in this account reduces the amount of money you owe on your mortgage, which helps reduce the amount of interest and helps you pay off your mortgage faster.
Pay Both the Principal and Interest
Paying back only the interest may be helpful short term, but it doesn’t do anything to reduce the amount of money you repay. Because your principal is not being reduced, your debt isn’t being reduced, and you’ll end up paying more in interest.
If you want to learn more about ways to repay your mortgage faster, the experts at Mortgage House can help.
