A mortgage is likely to be the single biggest outgoing in your household budget – so it makes a lot of sense to look at how you can save as much money as is possible. Here are three smart but simple tips on how you can secure some big savings on your mortgage.
1. Pay More Each Month
If you can afford it then paying a little extra towards your mortgage each month, above your scheduled payment, could save you big bucks in the long term. The key is to pay off the principal as quickly as possible in order to minimize interest payments – and if you’re able to do that upfront, then you can cut whole years off the loan and save tens of thousands of dollars in interest payments.
2. Reduce The Term Of Your Mortgage
Reducing your mortgage term from, for example, 30 to 15 years, might mean that you have a higher monthly payment in the short term but it will enable you to pay considerably less in interest as the years go by. In fact, halving the term will likely almost halve the amount of interest that you have to pay (as long as the rate remains fixed). That means that you’re putting a much larger percent of your money into your home rather than into your lender’s pockets.
3. Make An Extra Payment Every Month
This is another simple trick to accelerate the pace at which you pay off your mortgage. Some mortgage providers will in fact allow you to pay every two weeks, rather than once a month. Given that there are 52 weeks a year, this means that you’ll be able to make the equivalent of 13 payments a year rather than 12. While it may require a little more financial management to make a mid-month payment, it’s worth it. Though an extra annual payment might not sound like much, it will literally cut years off your mortgage.