Anyone who has a mortgage knows how difficult it can be to pay it off. When you do, it is such a cause for celebration. There is a satisfaction that just can’t be explained as you accomplish something you started years before. You need to be careful, make sacrifices, perhaps take on a second job on a part-time basis.
It’s a lot of money that hangs around you like a dark cloud that you wish would just go away. If only, eh? Well, let’s take a look at some really good tips that can help you save a lot of money on your mortgage.
1. Shop Around For The Best Deal
Just like a lot of things you buy, it pays to shop around rather than grab the first thing that comes by. However, it is more than just shopping around. Obviously, you want to get the lowest interest rate but it is more than just a low interest rate. It is all about the best deal you can get, when you compare the various options.
Remember that getting the best deal does not equate to the lowest price. It actually helps to get a mortgage service which allows you to make lump-sum payments if you choose, so that you pay the debt faster. Non-bank lenders may actually give you better prepayment privileges when compared to the banks. They may also lower your rates, so consider these lenders, because you could pay it off sooner.
2. Try Making Lump-sum Payments
It can be hard to do this, but sometimes, you can come into some extra money and when you do, make a bigger payment. This can be quite important because the lump-sum payment actually reduces your principal, unlike your monthly installments. Every little bit helps.
Sure, you may not strike the lottery, but if you get a bonus, your tax return, an inheritance or some other larger source of money from somewhere, use it for a lump-sum payment. Do you know why this is so important to do, if you can manage it? The benefits of doing so are twofold. It can reduce the amortization period as well as save you thousands of dollars on your mortgage interest.
3. Speed Up Mortgage Payments
Another way to speed up your mortgage payments and reduce the amortization period is to switch from a monthly payment to a bi-weekly payment. Your payment will be slightly higher, but in essence, you will be making a 13th monthly mortgage payment in a year when it should have been 12. When you do this annually, this will make a big difference. This can save you thousands of dollars in interest and depending on several factors, it can reduce your amortization period by a few years.
4. Make A Few Personal Sacrifices
You can also take a good look at some things in your life right now and see how you can save more money by making a few sacrifices. Anything you save can go towards making higher payments. Do you always eat outside? That gets expensive. Make and take your own food.
Do you have loads of channels on your TV that you don’t watch? Do you even have time to watch TV? Get rid of your monthly cable bills, get yourself an antenna, which isn’t expensive and you can get several channels for free. Think about things like this and when you add all these small sacrifices together, it can make a big difference.