10 quick tips for paying down your mortgage faster
Would you like to be mortgage-free sooner and enjoy financial freedom today—not in 25 years. Who wouldn’t? You could travel the world, take a less stressful job, or leave the workforce altogether. Imagine the possibilities!
Here are 10 quick tips for paying down your mortgage faster.
Pay your mortgage more frequently
Most lenders set you up on a monthly payment schedule by default. By request to pay your mortgage more frequently, weekly or biweekly, you can save yourself mortgage interest.
Accelerate your mortgage payments
If you want to save even more interest, consider paying your mortgage on an accelerated basis. With an accelerated payment schedule, you’ll pay the equivalent of 13 months of mortgage payments instead of only 12 (this is because you’re paying slightly higher regular mortgage payments).
Make lump sum payments
Unlike a regular mortgage payment that’s split between interest and principal, lump sum payments go straight towards principal, helping you save a lot more. Make lump sum payments with found money, such as bonuses, inheritance and tax refunds.
Double up your payments
Some lenders let you double up your regular mortgage payments with the extra portion going towards principal. For example, instead of only paying $1,000 biweekly, you could double that up to $2,000 biweekly, with the extra $1,000 going towards principal.
Increase your payments
Do you have any money left over at the end of the month? Then consider rounding up your mortgage payments with the extra cash flow. To make it easier, round up your payment to the closest $25. For example, if you’re paying $712 biweekly, round it up to $725 and save.
Shop around for your mortgage
Take the time to shop around for a mortgage when you’re buying a home – and at renewal. The easier way to do that is with a mortgage rates comparison websites.
Avoid mortgage penalties and fees
Find out what mortgage penalties you may face if you need to break your mortgage later on or fees you may face if, say, you run into financial difficulty and pay your mortgage late.
Shorten your amortization period
Instead of paying off your mortgage in over 25 years, consider paying it over 15 or 20 years. Your mortgage payments will be higher, but you could save yourself tens of thousands of dollars in interest over the life of your mortgage.
Avoid turning your home into an ATM
Be careful about borrowing money from your home through a home equity line of credit. By not turning your home into an ATM, you’ll be mortgage-free sooner.
Set yourself a mortgage-free goal
Write a date on the calendar you’d like to be mortgage-free. Work backwards and figure out what you need to do in order to achieve that.