With these tricks it’s easier to pay your mortgage faster than you ever thought possible! We’re sharing everything you need to know to get it paid off early.
We all dream of the day when we have officially paid off a mortgage and we officially own our own home.
It may, therefore, be music to your ears to learn there are some handy tricks to help you quickly pay off a mortgage.
One of the best ways to quickly pay off a mortgage is by making overpayments each month.
Many people make overpayments to shave years off their mortgage repayments, whilst reducing the amount of interest to pay on a property.
So, not only will you own your home at a much faster rate, but you will save money, too.
If you would like to identify how much money you could save on the property, you can use a loan repayment calculator to identify how many repayments you will be required to make when making overpayments.
2. A 20% Deposit
If a homeowner borrows more than 80% from the lender, they will be required to pay private mortgage insurance.
The insurance is approximately 1-5% of the loan, so can increase the length of your mortgage.
So, if you want to quickly pay off a mortgage and avoid private mortgage insurance, it is recommended to put down a 20% deposit on a property.
If you cannot afford a 20% deposit, it might be worth considering purchasing a lower-priced property.
If you currently own your own home and want to avoid paying private mortgage insurance, it might be worth overpaying on your mortgage to ensure it drops below the 80% line.
However, it is important to note that this is only possible if you have a credit score of 700 or higher.
3. Boost Your Savings
If you want to purchase a property sooner rather than later, you should try to be economical with your finances.
For example, you should aim to reduce your expenditure by purchasing items you need, over the items you want.
Combine the money savings with an increase in earnings, and the house could be officially yours before you know it.
To boost your savings:
- Ask your boss for a pay raise
- Monetize a hobby
- Open a high-interest savings account
- Skip the daily coffee purchase
- Pack your own lunch
- Cut back a cable package
- Change insurance providers
4. A 15-Year Mortgage
There is a big difference between a 15-year and 30-year mortgage.
While a 15-year mortgage will cost you significantly more than a 30-year mortgage each month, it will also ensure your home will be yours in just over a decade.
Another benefit of a 15-year mortgage is that you will pay less interest on a property, so the house will actually cost you less than the 30-year alternative.
5. One-Off Lump Sum
If you cannot afford to make overpayments each month, you should at least attempt to pay a one-off lump sum when possible.
So, if you suddenly receive an influx of cash, such as a workplace bonus or inheritance, use the money to pay off your mortgage.
The money could ensure your home is yours sooner than expected, even if it is just by a few months.
By actively taking steps to pay off a mortgage, you can guarantee the property will officially be your own at a much faster rate, and you will remove the biggest monthly expense from your outgoings.
Now that you’ve learned these helpful tricks, you’re armed with the information you need to pay your mortgage off faster!