Paying off your mortgage is one of the biggest financial goals of most homeowners, and retiring debt-free can certainly give your golden years a greater sense of financial freedom and stability.
Principal Versus Interest
Essentially, to pay off your mortgage you have to reduce the principal owing on your property. There are really two ways you can do this without dramatically reducing your monthly budget.
1. Increase Your Monthly Payments - even increasing your monthly payments by a small amount can take years off the life of your mortgage. You can also choose an accelerated plan whereby you can make weekly or biweekly payments rather than monthly. This will allow you to make a few extra payments each year. Combining these efforts can really have a surprising effect on the principal of your mortgage over a short period of time. There are a number of free online calculators (go to www.mortgagechoice.com.au) that can help you figure out the exact numbers for your particular situation.
2. Reduce Your Interest Rate - if increasing your monthly payments is not an option, you can still pay off your mortgage faster by refinancing your mortgage to negotiate a lower rate. Keep your eye on the financial markets to gauge the best time to make this move, and seek out the advice of a Mortgage Choice Springwood broker to confirm that this is a viable option for your current financial situation. If you have a good history of payment and an excellent credit score, finding a lender shouldn’t be a problem.
Make A Lump Sum Payment On Your Mortgage
Another way you can decrease your mortgage principal and pay off your mortgage faster is by making a large lump sum payment. If you have come into extra money, have received a large income tax return, or just have a considerable amount of savings, this may be a wise financial decision. It will also dramatically decrease the amount of interest you will pay over the life of your mortgage and thus save you money. Just be sure your mortgage does not include a clause that will penalise you, and then determine whether it is still a good choice before going ahead.
Contact us today at Mortgage Choice Springwood on 07 3808 1070 for your FREE home loan health check or visit our website www.mortgagecoice.com.au/springwood1 for more information