A mortgage is the biggest loan most people will take out, and it also means it is the biggest financial burden people have too.
Nobody likes debt, and the faster we can get rid of it the better.
I really believe paying off a home loan as fast as humanly possible should take a big priority in people’s finances. The quicker your home loan goes away, the quicker you can be mortgage debt free. Not to mention, the freedom of not paying a huge bill every month.
With all the extra money you’ll have once your mortgage is paid off, the freedom it will give you will be amazing.
That being said, there are some very very proven ways to pay off your mortgage faster. There aren’t really any secret tricks or sneaky ways that I know if. It’s really the simple tried and tested ways. You want to use them or a combination of them to pay off your loan quicker. Here they are below:
Refinance your loan to a shorter term
One of the most popular ways to pay off your mortgage faster is to refinance it to a loan with a shorter term. Refinancing means replacing a loan with a new loan. The new loan pays off the old loan (in the end, you’ll still have one home loan). And the benefit is that your new loan will have new terms that suit your financial situation better.
A refinanced loan can have a shorter term, let’s say 15 years for example. If you purchased a home initially on a 30 year mortgage, shortening it to 15 years means you will pay off your home debt a lot sooner, saving you thousands of dollars in interest fees.
Sometimes it’s possible to refinance your mortgage to a shorter term, and still pay a relatively same amount of monthly mortgage payment if you can get a low enough interest rate on the new loan.
To check which companies offer the best refinancing rates, use a comparison website like this one here.
Make an extra mortgage payment once a year or quarter
Making extra payments can decrease the amount of time you pay off your loan by years. If you have the means to do it, then do it! Popular times to add an extra payment are quarterly or once every year. Not all loan companies will allow you to do this. So you’ll want to speak with your mortgage lender to see what options you have to make extra payments.
Paying off your home loan quicker with extra payments is likely the best strategy to get out of debt quicker and to get rid of that home loan sooner rather than later.
Downsize your home
An ever popular way to get rid of debt is simply to have less of it by reducing the amount of debt you have by downsizing. If your home is bigger than it needs to be or you’re okay with moving to a smaller home where mortgage payments will be lower and more manageable, this may be the right move for your finances. It’s definitely a big change but it can give you the financial flexibility you need if money is an issue right now.
Make mortgage payments more frequently (bi-weekly)
If you are able to pay your mortgage bi-weekly, then you really should! What this means is that instead of making your loan payment once per month, you’ll split that payment in half, and make it twice per month. The compounding effect of making your loan payment twice per month can mean you pay your loan off 5 years or so earlier, and it will also save you thousands of dollars in interest rate as well.
If you’re currently on monthly payments, check with your lender to see what can be done to switch it to bi-weekly payments (paying it every 2 weeks). Your 26 payments per year vs 12 payments per year will save you a dramatic amount of dollars in interest costs over the life of your loan, not to mention get you debt free years sooner.
Think about combining the above
If any of the above makes sense for you financially, check them all out and see where you can benefit.
A mortgage is the biggest loan and financial burden for most people. Doing everything you can to pay less money in interest costs and paying off this massive debt as quick as possible is a big priority for a lot of people.
Again, you can get mortgage debt free 5 years or more earlier as well as save tens of thousands of dollars on interest costs by aggressively paying off your home loan as quick as possible using the strategies above.
A major way to save money is to take advantage of lower interest rates. If you can decrease your interest rate by 1% or more, it likely makes sense to refinance because it means you will benefit from lower monthly payments and it will reduce the cost to borrow money overall. 1% doesn’t sound like much, but when we’re borrowing hundreds of thousands of dollars, it can mean saving tens of thousands of dollars over the life of your loan.
Online is a great place to compare loan interest rates from companies competing for your business. Here is a comparison website.