Many people like to set themselves goals in life and these often pertain to their financial affairs. A: mortgage on a house is a large financial commitment that involves the payment of a significant proportion of your income each month. It is many people’s dreams to live a mortgage free life.
Unless you are lucky enough to have won or inherited a large sum of money that allows you to buy a house outright or pay off your mortgage in one lump sum, it is likely that you will have to look for alternative ways to pay off your mortgage early and benefit from the lowered outgoings each month. However, although difficult, it is a possibility. Here are some tips on how to pay off your mortgage early.
Budget
One of the most vital aspects in planning on how you can pay off your mortgage early is to devise a budget. This will help you to understand and take control of your finances. It will make it clear to you exactly what money you have coming in each month and what financial commitments you need to make. In turn, this will then allow you to see what extra income you have each month to spare towards paying off your mortgage and will allow you to plan ahead in terms of making additional payments. On the other hand, if you find that you do not have any money to spare each month, then you can look at ways of either increasing your income or reducing your outgoings.
Save money
One of the most obvious ways to pay off your mortgage early is to save money. If you do this in a high interest account then it is likely that you will save more money to pay towards your mortgage than you would by simply increasing your payments a little each month. Look for the best savings deal or seek financial advice with how best to save and invest your money.
Increase monthly payments
By increasing your payments by a little each month you can reduce the length and terms of your mortgage. Speak t a specialist adviser at the company you have taken a mortgage out with and they will be able to offer you the best options in terms of increasing your payments and reducing your mortgage. Alternatively, it can be wise to move your mortgage to a different company that offers a better deal and will allow you to pay off your mortgage in a reduced term for lower payments. If you are considering the latter option then it is wise to seek independent financial advice.
Don’t just pay interest
Usually, when people initially take out a mortgage, they are given the option of making interest only payments, or making payments that will gradually pay off their mortgage with a repayment mortgage. It is important to make sure that you are not paying interest only on your mortgage because the balance outstanding will never actually decrease.
Conclusion
Although paying off a mortgage can seem like a difficult, long-term financial goal, it is a possibility. With careful planning and the right advice, paying off a mortgage early is a realistic goal that will allow you some financial freedom later in life.