If you think it would take a lifetime for you to be able to pay off your home mortgage, think again. You can put in place some strategies so that you can reduce your loan term, say from 30 years to 20 or even 10 years.
• List all your monthly expenses and determine those that you can do without. For example, you can let go of your expensive spa sessions and try to do your own natural spa at home. That way, you can have more money to add into your monthly mortgage payment.
• Make lump sum payments. If you have received a bonus or incentive from your job, huge tax refund, or an inheritance, then you can make extra payments toward your loan principal instead of using it on a shopping spree. This will reduce several years’ worth of interest off your mortgage loan.
• Make one additional mortgage payment every year. Apply that extra repayment on the principal of your loan to decrease your loan term and get huge savings.
• Consider opening an automated or recurring payment system for your mortgage. Many banks offer this convenient facility free of charge. Take advantage of it so that your debt repayments will be consistently on time. Of course, you should know by now how penalty for late payments and additional costs on missed payments can drain your pocket.
• Review your loan. Your current mortgage might no longer be working for you because of the sudden and significant increase of interest rates. In that case, it is better to switch from a fixed rate mortgage to an adjustable rate mortgage. You can do that through mortgage refinancing. Enlist the help of a mortgage broker or any loan specialist who has a wide range of contacts that consist of mortgage lenders. He or she can help you choose a new provider for a new loan that you will get.
• Consider debt consolidation. You can pool your other debts such as credit card payments, car loan, or personal loan in one loan. Although your loan amount will become higher when you consolidate your debts, the dollars you save can more than make up for it.
• Increase your mortgage payments when the interest rates decline. Paying just an additional $20 to $50 on every monthly payment can reduce as many as 24 months from your loan term. So if you are able to do regularly that within one year, imagine the number of years you can cut off the entire loan period.
Save thousands of dollars and pay off your mortgage loan earlier than your loan term by following the points suggested above. These strategies can make a huge difference in your finances and cash flow.