A mortgage is a debt that requires commitment, it takes organization and effort to pay it off. But it’s a long time to be paying a quote! What if you were able to get rid of it sooner? It would help you achieve better financial stability and flexibility with your budget, and you could even save a lot of money by accelerating your mortgage payments.
However, there’s a lot of polemic about it. Should you finish your mortgage payments sooner or not? Each case is different, and you need to analyze what you want and what is the best for you. Because while some say it’s best to pay early, it may have to do with the country’s overall economy, but is it good for your credit? Would it have a significant impact? It may not even make sense or have a substantial effect on your particular case.
Ways to Accelerate Your Mortgage Payment
Accelerating your mortgage payments can be a lot of work. However, it’s rarely a good move to pay through an accelerated payment plan; these tend to increase the range of cash, which will take a good part of your budget. Instead, you can do it on your own.
Hit the Principal Early
In the first few years of the mortgage, you’re paying interest, but the principal is often not reduced! For that reason, you’ll have to address that first. All the money you put into it will have an impact on your future mortgage payments. It means that in no time, you’ll be paying less interest at the global number.
Paying extra can help reduce some years of your home loan, and you’ll save a lot of money when it comes to interest charges.
Add all the extra money you can to your mortgage payment. If you receive an extra payment at work or a gift from your family, add it to your mortgage payments.
- Biweekly payment: this means that you will pay the half of your monthly payment every two weeks. The result of it will be that you end up paying 13 months instead of 12.
- Monthly extra payments: if each month makes an extra payment, even if you add just $20, it makes a significant difference. Something like dividing the monthly fee by 12 can help you calculate how much you can add to the real charge to make a positive impact. Keep in mind that you need to specify that the additional money should be applied to your principal balance, not to the following month’s payment.
- Extra payment each year: try to make a payment every 12 months (or less!) equal to a full month of payment. This can speed up your final debt repayment process. But it has an additional benefit to your finances in the long run. If you want, you can use your tax refund for making good use of the extra payments.
Refinance Your Mortgage
Refinance to a short-term mortgage, as these often have lower interest rates. Short-term mortgages can mean a quicker payoff but usually have higher monthly fees. Consider that if you refinance to a 10 or 15 years mortgage, you can get it over within a shorter period.
Refinancing is a good idea if you’re moving to a shor-term mortgage. You don’t want to extend your loan term; it could cost you more in the long run.
Consult your real estate agent before doing anything on impulse! You need to make sure that your mortgage company allows you to make extra payments and under what conditions. Keep in mind that if you don’t know this, you may end up paying prepayment fees. Also, remember never to run out of money: always make sure you save money for emergencies, have a prepared attitude in case of need. You’ll win in finance, credit, and mortgages!
The best way to make the right decision is to consult with professionals. Intercorp Mortgage Solutions has a panel of experts who can give you the best advice when it comes to mortgage payments.
Intercorp Mortgage Solutions has the best alternatives for you when it comes to the financial world of property ownership. Make sure you check all the options and thus improve your life and opportunities with their specialized services.
Intercorp Mortgage Solutions
Phone Number: (305) 517-5633