Friday, September 8, 2017

A Clever Way To Pay Off Your Mortgage Early!

If you want to save tens of thousands of pounds over the lifetime of your mortgage, there’s one simple thing you need to do: pay it off early. In the first ten years or so of your home loan, much of the money you pay will be interest. And, while at the moment rates are relatively low, it’s still a huge extra burden to bear over the mortgage length.

Now, I appreciate a lot of you might be struggling to make ends meet, and paying more each month for your house could seem like an impossible task. But it isn’t if you put your mind to it. In this guide, we’re going to go through everything you need to know about paying off a home loan early and save yourself an enormous amount of cash. Ready to get started?

Check your overpayments

First of all, consult with your lender. Most banks will allow you to overpay by a certain amount each year, but because they are a little on the greedy side, they want to ensure they still get their pound of flesh. So, if you go over this overpayment limit, you can expect a charge. Using a little mathematics will soon tell you if this charge is worth it over the course of the mortgage, but if it is going to end up costing you more cash, it’s best to stick within your limit.

The maths

While we’re on the subject of maths, let’s look at the sort of figures you could save. Assuming you have a 3% mortgage for $150,000 over 25 years. If you pay the standard monthly rate, by the end of the loan period, you will have spent $213,795 on that $150,000 home. However, if you could stump up an extra $100 a month, you will not only cut your interest payments by $12,000, but you’ll also have more than four years less to pay on your loan. Impressive, right? But where, exactly, can you find that cash?

Bonuses, tax refunds, windfalls

The chances are that your household runs OK on your budget. Sure, it would be nice to have a little more, but in truth, we can all live within our means. So, the next time you get a little windfall, put it in the best place - into your home. You won’t miss it, as it wasn’t available before, and your household spending won’t be affected at all.

Cut energy use

There are lots of ways we can all have money in the home when it comes to heating and power. You can save money with solar, insulate your loft and walls, and start making sure you turn everything off when it’s not in use. But one of the most practical - and easy - things you can do is switch suppliers. According to research, you can save hundreds of dollars over the course of a year just by filling out a form and moving providers. Combine switching with a more eco-friendly approach to energy use in the home, and that could be up to $50-60 a month already.

Switch your groceries

Savvy shopping can cut your grocery bills by an astonishing amount. Meal planning, shopping at discount stores, and switching to unbranded food products can all add up to a lot of savings. According to statistics, Australian households spend up to $314 per week on groceries - and it wouldn’t be too hard to get that down by 50 bucks or so.

And there you have it - an extra $100 into your mortgage account with virtually no trouble at all. Get that mortgage paid off!


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