Pay off the mortgage early can save you money in interest over time. It will also allow you to eliminate a large monthly payment, giving you a lot more freedom once you’ve gotten rid of those expenses.
It can be challenging, however, especially since a mortgage is a huge debt. However, there are a few approaches that can help you bring your mortgage loan balance down to $ 0 faster. Here are three of them.
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1. Make bi-weekly payments
One of the easiest ways to pay yours mortgage it is faster to make bi-weekly payments. You see, mortgage payments are due once a month, but a lot of people get paychecks every two weeks. Instead of making a monthly mortgage payment, you can split your payment in half and pay that amount each payday.
This technique works because if you get paid twice a month, you get 26 paychecks a year. So if you pay your mortgage around the time of each check, you will end up making 13 payments a year – instead of the 12 you would make if you only paid your loan once a month. That extra mortgage payment that you make every year lowers your loan balance and shortens your payout schedule.
Some Lender have programs that allow you to make bi-weekly payments so see if yours does. Otherwise, you’ll likely have to transfer the money to a bank account every payday and then just make one regular monthly payment but include the extra money. That’s because your lender may not accept two payments per month if they are not set up to do so.
2. Put luck in your mortgage
Another great way to get your mortgage paid off early is to make an extra payment on the principal (the original amount of your loan) when you get your hands on money that you haven’t earmarked for anything else. For example, you could use a tax refund, government business check, monetary gifts to be given on your birthday, or a bonus for your job.
If you make these lump sums in addition to your regular mortgage payment, you can use the entire amount to pay off your loan balance. (There is no interest on the money, unlike your regular monthly payments.) This can speed up debt payments considerably – especially if you regularly make lump sums.
Finally, you can choose to add a certain amount to each mortgage payment you make, e.g. Again, this extra money can be used to reduce the capital to speed up your payout period.
Which approach is best for you depends on your goals, how often you get paid, and what your mortgage lender allows. And when you Yes, really If you want to pay off your mortgage as quickly as possible, all three techniques can be used.
By paying twice a month, adding a little bit to each payment, or making an additional lump sum whenever you can, you should be able to pay off your loan well ahead of schedule – and pay your lender much less interest in time.