Paying off your mortgage quickly is possible with proper planning and budgeting. It won't happen overnight, but even making small changes here and there will benefit you in the long run.
Mortgage Repayment Tips
In this article we look at a really basic thing about a mortgage: how to pay it off quicker. Now a lot of us think about this but a lot of us just fall into the trap of set and forget principal and interest payments and the bad news is, it’s going to take maybe a 30 year term to pay off your loan.
The main thing to think about is, any additional money that you have, if you’re thinking about putting it into your loan, do it and do it earlier rather than later.
To use an example, if you have a $250,000 home loan and let’s say the interest rate is 6.5% and it’s your standard 30 year term. Now if you pay $5000 off your mortgage at the end of year one, you’re going to save $26,000 over the life of that home loan.
If you contrast that by paying $5000 later, say at the end of year 5, then what happens is, you’re only saving $19,000 in interest so you can see that if you do have some extra money, the sooner you can pay it into your home loan, the better.
The other way obviously to pay off your home loan is the slow bits at a time. Don’t discount the value in putting an extra $50 into your home loan. On this same example of putting $50 a month into the home loan over and above your regular repayments, that’s going to save you 2 years and 7 months off the term of your home loan which equates to $30,000.
So every time you forgo that coffee or you forgo those snazzy shoes then just think about how much more you’re saving because you’re not paying so much on your mortgage.