Repay your mortgage faster with the help of these tips

Having your own home is a great financial goal to work towards but once you’ve reached that goal, what’s the next step? It’s easy to get caught up in the monotony of regular mortgage payments, but if you want to accomplish your other financial goals like retirement saving faster, paying that mortgage off first is a clever step to take.

Not only will it save you a huge amount on interest, but it’ll open you up for more financial freedom and the ability to focus on saving. But with mortgage prices going through the roof due to our housing costs, it can seem like an impossible feat. So we have put together these tips to simplify the process, and have you living the debt-free life sooner than you could have imagined!

  • Make extra payments. This may seem like basic advice but it will seriously help you reduce the principal on your mortgage which will in time bring your interest down. See leftover money as a means to a debt-free life, sacrificing small things now will pay off in the long run.
  • Put a set amount aside each week for extra payments. Don’t include this as regular payments in your mortgage but start with $20 and gradually increase the amount as you grow more competent.
  • Pay an extra $500 per month to bring down the principal. This will make future payments cheaper and save you paying huge amounts of interest and not as much of your principal.
  • Refinance your mortgage. Did you know changing from a 30 year mortgage to a 10 year mortgage can save you tens of thousands of interest? It may seem easier to have the payments spread over a longer period but think about the money you could have saved in that time.
  • Cut out any unnecessary costs and use the money you save as an extra payment. Keep track of how much you’ve saved on frivolous spends like morning coffees, Friday after work drinks, or bought lunches. Keep the money until the end of the week so you can measure the success of your saving and it’ll keep you motivated seeing how much you’ve actually saved on those cafe sandwiches.
  • Pay your fees and charges up front. If you can pay these off when you apply or early on in the track, it will save you hugely on the interest.
  • Review your loan regularly. Keep checking your loan is the best on the market for what you need, and if you need to change to a better suited lender. Make sure you’re aware of flexibility in terms of extra payments and early settlement and confirm it won’t cost more than it’s worth to change.
  • Put your tax refund straight towards your mortgage. It’s not money allocated anywhere and if you don’t use it to your benefit, you’re likely to waste it on something unnecessary. This will save you money and teach you important skills about prioritising money.
  • Put any extra money you receive straight into your loan. Instead of birthday presents or wedding gifts, which are often items you don’t need anyway, ask people to write a cheque to help you get rid of your mortgage. Explain the value of your home and that it’s your goal to own it outright. If you receive bonuses from work, take a small portion to reward you for your hard work (you deserve it), and use the rest as an extra payment.

It’s not the impossible feat you’ve made up in your head, nor will it be a piece of cake, but with hard work and determination you will be able to repay your mortgage and begin your debt-free life!