If you’re thinking about ways to finally pay off your mortgage loan, these seven tips will help you achieve that goal — and fast. We’ve compiled a list of the best options which will suit any unique situation and provide an overview of the pros and cons for each one, plus what to know before choosing. So don’t start dreaming about your free time — start doing.
- Earn money – You’ll need $$$ in order to make fast progress with this repayment method, but if you can manage it then congratulations! The great thing about this option is that the more money you make, the more interest is eliminated from your mortgage amount per year (plus it’s one less bill to worry about). So a little extra cash in your pocket could mean a lot less in your mortgage loan.
- Hoard money – Hoarding money in a piggy bank is a great start, but unless you plan on living in it, you’ll probably need to invest that cash into something else for it to be worth it. If you’re thinking about buying something that will increase your property value over time, then go with that instead of hoarding because you’ll have to put more money into the repayment every month if your house is worth more. This option works best for those who have a property assessed at a lower value than they owe.
- Make extra payments – Making extra payments every month to reduce the amount you owe is a great way to start paying off your mortgage loan, but remember that this option isn’t without its drawbacks. Because it’s an upfront additional payment, you might end up with less in your pocket when it comes time to make your regular payment.
Refinance – If you want to be able to take advantage of the benefits associated with refinancing in addition to paying off your mortgage loan in 100% of the balance in 20 years or less, then go for it! It will take a little more work on your part at the beginning, but over time this option will save you thousands in interest and keep you from having any payments at all.
- Balance transfer – The right balance transfer will save you a good chunk of cash each month, but think carefully before choosing this option since it involves a lot of math and management on your part. Carefully consider the transfer amount, balance length, and interest rate before committing or you could end up with more debt or have to pay for it all over again.
- Make minimum payments – Making minimum payments each month is a good way to make a little bit of progress toward paying off your mortgage loan balance if you don’t have enough available cash to make extra payments or make any other changes. However, if you use this strategy alone, remember that it can take decades to complete the repayment process because it’s not very efficient.
- Forgo the mortgage payment – The last option is to simply skip the mortgage payment altogether and save money on taxes, insurance, and other costs associated with your mortgage loan. However, if you don’t pay off your loan in a reasonable amount of time or make any additional payments, you could end up losing out on valuable tax deductions!
Why Pay Off a Mortgage Early?
In addition to being a good idea to save money, paying off your mortgage loans early will also help you avoid additional interest payments that could add up to thousands of dollars in just a few years. And, if you have a lot of property value left over from the sale of your house after you pay off your mortgage, it could be worth it to save even more money!
More Ways to Save for a Mortgage Loan Now that you’ve learned about the options available for paying off a mortgage loan early, let’s take a look at some other ways you can save money before doing so.
The first one is through using the right type of account. Most banks and credit unions offer several savings accounts which can benefit different types of investors. For example, a regular savings account offers a higher rate of return than a CD, but you can’t access your funds without paying a penalty fee. The next option is to explore other financial institutions as well as banks and credit unions to find the best rates available. Finally, if you don’t have enough cash to make up the difference between what you owe and what your house is worth, consider getting a second job or doing freelance work. This way you can get extra cash immediately, pay off your mortgage loan quicker, and save money in the process.
Advantages of Paying Off Mortgage Early
The biggest advantage to paying off your mortgage loan early is the elimination of the monthly payment. If you’ve ever watched your money disappear when making regular, bi-weekly, or monthly payments, you know how frustrating it can be when there’s nothing left in your wallet at the end of the month.
Another advantage is that you’ll benefit from valuable tax savings that are associated with most mortgages. Mortgage interest is considered an “above the line” deduction which means it’s automatically subtracted from your gross income before you pay taxes. This means that your taxable income will be reduced by an amount equal to the interest each year; in addition, you don’t have to itemize to take advantage of this deduction.
Lastly, to many homeowners, paying off their mortgage loan completely is an emotional relief. They have the opportunity to relive the feeling of owning a home without having to worry about making payments. And unlike continuing your mortgage loan payments over time, you don’t have the stress of keeping track of multiple mortgages.
Disadvantages of Paying Off Mortgage Early
The main disadvantage of paying off your mortgage loan early is the impact on the value of your home. If you don’t plan on selling your home, you could end up losing thousands of dollars in house value if it’s worth less than what you owe on your mortgage loan. The longer you wait to pay off your mortgage, the more valuable your home will be, but if you can take advantage of this option now, then it could be worth it.
You’ll also need to keep track of multiple mortgages, which can be confusing. You should use a piece of paper or something similar to list all outstanding balances so that it’s easier for you to remember everything and to track the progress toward paying them off.
If you want to pay off your mortgage quickly, there are many different ways to do so. In most cases, the best option for paying off a mortgage loan early will be a combination of some or all of the options above. If you have the time and money available to complete the process, you’ll have more funds available in your savings account and can move on with your life. Whether you have a solid plan in place or just want to get started on paying off your loan, don’t wait any longer to take action! It can definitely save you thousands of dollars over time. For more help with the mortgage loan get help from Canadian Cash Solutions, and get the best help from them for the same.