When it comes to purchasing a property, whether for the first time or not, it can be pretty tricky. Not only do you have to contend with the location of the house itself, other miscellaneous factors will come into play. For finances, one of the most significant components to pay attention to is the mortgage.
The loan that you are given by a lender can be substantial, to say the least. To make matters a bit more stressful, payments can seem like they are difficult to keep up with. However, this doesn’t have to be the case.
Check out these seven tips for paying off a mortgage early:
Tip #1: Be financially viable
The best tip to pay off a mortgage early is to understand your financial situation. First and foremost, it is important to ascertain whether or not the decision to buy a home is possible. Your financial affairs have to be in order, to even be considered for a mortgage. As such, you should ask yourself some key questions, before proceeding with the mortgage process.
For instance, is it possible to make a ten or twenty per cent down payment? Can you afford the fixed-rate terms of a potential mortgage down the line? If the answer to these questions are no, then you should take the time to get your affairs in order. It may be difficult, but it always helps!
Tip #2: Enlist a mortgage professional
First-time home buyers who are serious about purchasing a property often go about the process alone. Unless you are knowledgeable in this area, private mortgage lenders should always advise you. Experienced professionals can help you find a home with a mortgage that is easy to work with.
The more experienced, the better. Some professionals can even find you a home that is competitively priced within the market. Always do your research here, and get quotes from multiple agents. That way, you’ll be more confident in selecting the one to go with.
Tip #3: Downsize a home
For those who are already living in a property with a mortgage, this idea may not be so bad. Sometimes, keeping up with monthly mortgage payments can be rather difficult. If your home is fairly large, the mortgage taken out can reflect that in the form of larger payments. Make things easier on your end by considering downsizing your home.
If you sell your larger home, you can use the profits to purchase a home relative to your financial circumstances. This can make a huge impact on your ability to pay off your mortgage, since you will have additional cash flow. As soon as you are able to sustain your livelihood, paying off a mortgage becomes easier.
Tip #4: Make additional mortgage payments
Most homeowners will generally make a once-a-month payment towards their mortgage. If possible, making the move to paying twice a month can significantly reduce the time it takes. For example, if you make a payment once every two weeks, you’ll be able to pay off the loan quicker. Of course, ensure you consult with your lender and make sure you have the extra cash!
Tip #5: Refinance the mortgage
In some cases, the terms attached to a mortgage may become more difficult to work with overtime. Consider refinancing your existing mortgage, if you find yourself in this scenario. Refinancing means that you negotiate with your lender, in order to take on new, favourable terms.
These terms can vary from borrower to borrower, but most are incredibly helpful to work with. You could consolidate some existing debt, which will allow you to pay for larger expenses in the home. Or, you might be able to be given a lower interest rate, making payments easier. While it may not be for everyone, it is definitely something to consider.
Tip #6: Save money
To make larger payments towards your mortgage, you’ll need to find ways to acquire more cash. This can range from taking on an additional job, or even implementing new, money-saving techniques. It can be as simple as not eating out every day, or spending money on things you don’t need.
Small sacrifices definitely go a long way, especially if you want to pay off a mortgage. Take a look at your daily activities, and see if money can be saved by switching them up. You’d be surprised at just how simple it is to make money by altering your habits!
Tip #7: Maximize down payment
This may be reserved for a small minority, but, it can still be a possibility. If you are able to, try putting one-hundred per cent towards your down payment. No mortgage means your house is essentially yours!
Buying a property comes with additional caveats that are challenging to work with. When it comes to your mortgage, there are ways to circumvent the financial intricacies. All it takes is a little organization on your part!