For many people, getting home ownership has always been a great dream. Regardless of whether you have an investment property or owner-occupier, there are various benefits when you pay your mortgage quicker before your loan term ends. Now, the question arises, how to pay off mortgage faster? Let’s explore different tips and tricks to pay your home loan sooner.
How to Pay Your Mortgage Off Quicker?
There are some small changes that you can make that will help you pay your mortgage sooner, such as:
- Increase Repayments Amount
You can shorten the time it takes to fully repay your mortgage by increasing the amount you pay back to your lender. Many of you may ask what is the fastest way to pay off your mortgage? Well, making payments above the minimum requirement will gradually reduce both the principal loan amount and the interest you accrue throughout the loan’s duration. For example, if your monthly mortgage repayment is $1,800, opting to pay $2,000 instead may seem like a small increase in expenses, but it can lead to an accelerated mortgage payoff.
- Make Repayments More Frequently
Discover a lesser-known strategy to speed up your journey to becoming mortgage-free: transition from a monthly mortgage payment to a weekly or fortnightly schedule. To answer your question ‘How to pay off home loan faster’, it can be said that by increasing the frequency of payments and making this switch, you’ll effectively contribute an additional month’s worth of home loan repayment each year. This approach requires minimal discipline or sacrifice on your part, and you’ll hardly even notice the difference!
- Refinance to Lower Interest Rate
Choosing to refinance your loan to get a lower interest rate can have a positive impact on your financial situation. By securing a lower rate, you have the potential to save a significant amount of money throughout the duration of your loan. However, if you secured your home financing prior to the historically low rates, you may still have an opportunity to save money by refinancing. Given the likelihood of further rate hikes in the future, opting for a lower interest rate through refinancing could result in significant savings for you.
- Consolidate Your Debts using Refinance
If you want to refinance your home loan, consider consolidating your other debts into your home loan. By consolidating your other debts, you can save a hefty amount. Debts such as credit card debt, personal loans, and car loans have higher rates as compared to home loans. By consolidating other debts, you can save money.
- Use an Offset Account
One of the toptips to pay off mortgage faster is using an offset account. If you want to make additional repayments without using all of your money for paying your loan, an offset account can be used. Basically, an offset account is associated with your home loan. The funds are offset against the loan that you deposit into an offset account, i.e. you will be only charged interest on the difference between the balance of your loan and the balance of your offset account
- Be Careful When You Refinance
When you look to refinance your home loan for years, it would be a smart move. You may find yourself asking ‘How can I pay off my mortgage faster’, then you can opt for the refinancing option. While it’s not important to refinance frequently, you must check your interest rate when you refinance and make sure to check that your home loan matches your current financial situation. You can check the following things
- Don’t pay for features you are not using. Offset accounts are a great option, but if your offset account is empty, then the annual fee would be wasted money.
- Make sure you are not overpaying in terms of fees and charges as there are various lenders offering low to zero fees loans.
- When refinancing, make sure that you don’t restart loan tenure.
Many of you find yourself asking how can I pay off my 30-year mortgage in 10 years .Well, you can follow the tips mentioned above that may help you pay off your home loan faster.
Is It Good or Bad to Pay Off Mortgage Early?
If you pay off your mortgage, you can save thousands of dollars in the long run. Even if you pay additional repayments, then they can help you pay off your mortgage sooner and get home ownership. Ensure you have enough emergency funds before you use your money toward your loan.
All of the above-mentioned tips will help you pay your mortgage sooner and get home ownership fast. For further help, you can seek help from one of our experts at Home Star Homeloans.