Owning a home is a dream come true for most people. Homes are one of the most expensive properties we could have in life aside from cars. You’re lucky if you have adequate resources to build a house in cash. Basically, you can still have your own house even if you don’t have the full resources as of the moment. Most home buyers apply for a home loan so they could get the house they’ve been dreaming of and pay for it for a certain period of time.
The duration of every home loan greatly depends on your current financial status and varies from one person to another. Some have to pay it for 5 year while others opt for 10 or 15 years. Having a debt for that long can get stressful later on that’s why it would be great if you get to settle it for a shorter time. You don’t have to worry anymore because here are some simple tips that could help you pay off your loan in a shorter period of time.
Choose Shorter Payment Terms
Longer payment terms may have more affordable monthly payments but that doesn’t mean it’s the best choice. Time is always an essential factor in every kind of loan, including home loans. Practically, you can save a lot on the interest rate when you opt for shorter payment terms. The monthly amortization is slightly higher than longer payment terms but the savings you enjoy is worth it. Just be sure that you can afford to pay it monthly to avoid penalties and free your mind from debt as soon as possible. Consult an expert broker like SDK Finance home loans to help you find the best loan type for you.
Repay More Frequently
Another great technique to quickly pay off your loan is to make frequent repayments rather than just monthly ones. Paying your amortization every two weeks is a perfect schedule to follow. You wouldn’t notice it but you’re actually paying for an extra month when the year ends. Frequent repayments also lower your interest costs because it shortens the term of your loan.
Pay in Lump Sums
Aside from making frequent repayments, paying in bulk or in lump sum also shortens the duration of your mortgage. There are plenty of opportunities where you can get money for a big one-time payment such as mid-year bonuses, 13th month pay, inheritance and many more. If you don’t have an immediate need for this big amount of cash you receive, it would be best to allot it into your home mortgage and enjoy the amazing interest savings.
Cut Down on Expenses
Cutting down on your daily expenses helps you yield extra cash for your monthly mortgage. You can start off by packing your own lunch, taking a bus or train instead of a cab, and many more ways. Set your priorities first to easily balance your finances.
The faster you pay off your home loan, the earlier you get to enjoy the feeling of owning a house without the burden of debt on your shoulders.