Sure, your Guelph mortgage brokers helped you land the best mortgage rate and terms. But, do you want mortgage lenders to get off your back faster? If yes, then you are not alone. Millions of homeowners are looking for ways to pay off their mortgages sooner than later. Why? Glad you asked.
The Advantage of Paying off Your Mortgage Faster
Ask any homeowner, and you’ll hear complaints like “interest on my mortgage is killing me!” And, yes, the interest you pay on your home loan or mortgage can rack up pretty fast. By paying off the mortgage sooner, you will save yourself oodles of money in the long run.
Tips for Faster Mortgage Repayment
(1) Make Extra Payments throughout the Year
If you make an additional payment every three months, for instance, you’ll pay off a traditional mortgage 11 years earlier, and you might save yourself more than $60,000 in interest charges. Each extra dollar you put into your mortgage account will drive your loan balance further down.
(2) Refinance Your Mortgage with a Shorter Term Home Loan
If you want to pay off your mortgage in say the next decade, you can do it by refinancing into a 10-year home loan. The benefits of refinancing into a shorter term mortgage are vast. For one, you will be able to get a much lower interest rate and even more flexible repayment terms. Even better, you have the high hand in negotiating better redraw facility so you can always take advantage of the equity in your home.
(3) Throw “Unexpected” Money at Your Mortgage
It happens – people win lotteries. Have you received a huge end-year bonus? Did you get any windfall during the year? Did your grandpa or grandma leave you a fat check? All those “found” money should be directed towards payment of your mortgage.
If it isn’t too much trouble, you might want to sell your bigger house and move to a smaller, less expensive home. This way, you will bring down monthly utility bills and get something extra from the sale to throw at your mortgage.
(5) Get Rid of LMI
If you didn’t have 20% deposit to put down on your home loan, then you probably had to pay for mortgage insurance. Once you’ve paid off at least 20% of your mortgage, you can get rid of LMI to get the lenders off you back earlier.
(6) Set up a Mortgage Offset Account
You can reduce the interest charged on your mortgage by creating an offset account so that some of your savings and income can go directly into paying off the mortgage.
There you’ve it — 6 tips on how to repay your home loan quicker and save money. Remember the secret to no-hassle mortgage repayment lies in a good rate and terms. Be sure to work with experienced Guelph mortgage brokers to get the best of the best deal.