Five Ways To Pay Off Your Mortgage Early

So you want to pay off your mortgage faster – don’t we all…

For most Kiwis, the mortgage will be the largest financial commitment that they will ever have.

Unfortunately, most people do not make much of an effort to understand how the loans should be set up, or how they should be managed to allow you to pay your mortgage off faster.

People tend to just accept the mortgage the way the bank has approved it.

Five Simple Ways To Pay Your Mortgage Off Early

1. Review the loans and the interest rates offered – review your loans with a mortgage broker as they may be able to get better home loan interest rates, but will at least ensure that you are getting competitive home loan rates.
2. Split your mortgage into separate loans – too often the banks will provide your total mortgage in just one loan. This gives you very little flexibility as any changes that you want to make affect the whole of your mortgage lending. If you want to break a loan, you have to break the whole mortgage, which can be expensive.
3. Use a revolving credit account – this allows you to apply money to your mortgage as soon as you receive it (on your payday) so you are saving the maximum interest. Revolving credit accounts calculate the interest daily so even having the money in your account for an extra day will save you money.
4. Increase your repayments – the banks will generally set your repayments at the minimum and therefore it will take the full term of the mortgage to get paid. Most of what you pay (your repayment) will be interest with a small amount being paid off the principal. If you want to pay off your mortgage faster then the best way is to increase your regular repayments as every extra dollar goes to paying off more of the principal amount.
5. Pay lump sums – as mortgage brokers we encourage people to pay a lump sum every time that they refix their loans. Even a small lump sum helps to reduce the principal owing and can shave years off the term of your mortgage.

Small Changes Make The Difference

Don’t try to bite off more than you can chew!

With so many tasks you are better to break them down into smaller “bites” rather than trying to take them on in one large task.

Your mortgage is no different – and it’s certainly one of your life’s biggest (or the biggest) financial commitments.

Desmond Tutu once said that “There is only one way to eat an elephant: a bite at a time.”

He meant that things in life seem quite daunting and even impossible, but they can be accomplished gradually by taking on just a little at a time.

This is a common experience, and it’s the reason so many people fall short of turning their dreams into reality.

They try to eat the whole elephant in a single bite.

Mortgages are no different.

A mortgage is generally a huge debt and unlike most loans, a mortgage is generally structured to be paid off over the next 25 years or 30 years.

That’s a long time and it is hard to imagine the day it finally gets paid off.

Mortgage Brokers Keep You Focused

Splitting your mortgage into a few smaller loans is one way to get focused.

You will see the difference as a smaller loan reduces and this keeps you focused.

Having a mortgage broker review your mortgage with you is another way to keep focused, and it also allows you to ask questions and fine-tune things.

A good mortgage broker will help you keep on track, which is one good reason to contact a mortgage broker. All you gotta do is click below.