It’s something looming over every new homeowner, at times causing monthly anxiety and financial stress: mortgage payments. Truly owning your home, mortgage-free, is the aspiration of all homeowners and paying off your mortgage can help you achieve financial freedom. Here are some simple and easy financial tricks that can help you pay off your mortgage faster:
Accelerated bi-weekly mortgage payments
Changing your mortgage payments from monthly to accelerated bi-weekly can help you pay off your mortgage faster, as well as save you money in interest. Before you change your payment schedule talk to your financial advisor and be sure that your bank account is robust enough to support more frequent mortgage payments.
Refinance your mortgage
If it has been awhile since you first financed your home, you may want to consider refinancing your mortgage to see if you are eligible for a lower interest rate and shorter mortgage time-frame. This will not only help you pay off your mortgage faster but could possibly save you tens of thousands of dollars in interest. Talk to your financial advisor to see if refinancing is an option for you.
Increase the amount of your payments
Increasing the amount of your mortgage payments by just $100 a month could shave a few years off of your mortgage and save you a significant amount in interest payments. Therefore, try rearranging your budget so that you can redirect more money towards your mortgage – even a small amount can help you achieve financial freedom sooner than you think.
Put unexpected money towards your mortgage
It’s always tempting to put unexpected sources of money towards a last minute trip or a shopping spree. Instead, make a commitment to put all sources of unexpected money towards your mortgage. Whether it’s a birthday cheque, work bonus or larger than expected tax return, every little bit helps to chip away at your mortgage.
Choose a 15-year mortgage over a 30-year mortgage
If you are in the process of purchasing a new home, this is the easiest and most obvious way to pay off your mortgage faster. So while your monthly payments will be higher, it will definitely be worth it in the long run when you are a debt-free homeowner. With a 15-year mortgage, you will also save money on interest, since interest rates are generally lower and the interest term is shorter.
Investing in your own home is one of the safest financial decisions you can make. A free and clear home can provide you with the freedom and flexibility to live the life you’ve dreamed of. Whether you’ve owned your home for a number of years, or are in the process of purchasing a new home, I hope you find these tips helpful on your road to financial freedom.