A few good tips for those wanting to reduce their mortgage faster.
1. Build a budget: If you don’t already have a budget, now is the ideal time to start one. Ensure it factors in all your regular spending – home and/or other loans, utility bills, medical expenses, memberships, grocery bills, insurance costs, etc. Be honest with your budget and refer to it each time you contemplate a new expense.
2. Slash your cash limit: Consider ways to cut your daily spend. For instance, a daily caffeine hit at $4 per weekday equates to $80 per month. Buying a coffee every second day and contributing the $40 extra per month to your mortgage from day one (based on a $300,000 loan over 30 years at 6%) can help you reduce your total loan term by almost 2 years.
3. Consider switching: By reviewing your current banking situation, you may find there is a lender that offers lower fees and higher interest rates on savings accounts, which could help you to reach your financial goal sooner. But it is not just your bank accounts that need to be reviewed. You may be paying more than is necessary on your home loan, insurances, utility bills, etc.
4. Pay off your credit card: Make paying off your credit card a priority. Debit cards are an ideal alternative, providing a similar level of protection for online and over the phone purchases, without the significant interest rates.
5. Look at refinancingWhen done right, refinancing your mortgage can help you save thousands of dollars. And, with interest rates currently sitting at historical lows, you may find there is a product out there that is not only ideally suited to your needs but has a lower interest rate.