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What Is The Smart Way To Pay Off The Mortgage?
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With car loans and home mortgages, people generally tend to follow one rule – the sooner you pay off the debt, the more money you will be able to save. Mortgages are stretched over long terms and that only means that the loan gets a longer time to accrue interest over the principle amount. So, if one is able to cut down this period, he is obviously going to save a handsome amount of money for himself and his family.
Would Making Larger Repayments Help?
Monthly repayments, to pay off the mortgage, already take the larger chunk of most people’s income; therefore it seems sometimes ludicrous to think about paying it off earlier as one has many other costs to think about, like insurance bills and bills of credit cards, mobile phones and energy supply. You can get lower introductory rates by shopping extensively at the beginning, to compare rates, but that still doesn’t completely solve the issue in the longer term.
However trends are changing and if you are really smart in your dealings, then there other ways through which you pay off the mortgage sooner and still enjoy the lifestyle that you are enjoying. Imagine how you can take years off of your loan period by making slight adjustments in your repayment methods. Here is what you can do to shorten the lifespan of your home mortgage.
• How About Bi-Weekly Payments?
Here is a simple yet truly amazing method to reduce the term period of your home mortgage. You don’t have to pay extra and still it works like a charm. Simply divide the monthly payment in half and pay this amount every other week. If you look closely, in a year, you would be making one extra payment by going biweekly, instead of paying one payment after every 4.34 weeks (equal to one month).
This will help you in two ways –
Firstly with each payment the principle amount will be reduced and
Secondly, the interest will be recalculated earlier on the changed principle amount.
• How About Refinancing?
If it has already been a few years, paying off your mortgage, then it is high time you should check your present credit rating. If you have improved over the last few years then you become eligible for home refinancing with better interest rates. Those with better credit rating are offered lower interest rates and you can be too if you have a good credit history.
• How About Utilizing Tax Benefits?
Mortgages are more or less like other loans; however the thing that keeps them apart is the tax benefit that one can enjoy over the home mortgage. Whether it is in shape of tax deduction or tax credit, you can certainly make use of the tax break to pay off your mortgage a lot earlier than is in the cards. You might have to take a little longer to do taxes next year but isn’t wavering off months or years from your mortgage, worth it?
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