Your family has a house that it can call home, and all is well in your world. However, you still have the burden of a hefty mortgage lingering over your heads. You understand that it was necessary to buy your home, but it's reached a point where your mortgage is getting hard to handle. You've been paying it for many years, yet you still have over a decade left before it's paid off. Honestly, you wish you could just pay it off as quickly as possible and be done with it!
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That raises a question: how can you repay a mortgage as quickly as possible? Realistically, three different options present themselves to you. The unique thing about these options is that there's one for just about anyone. As you go through and read about each one, that statement will start making more sense. So, without further ado, let's take a look at the fastest ways of paying off your mortgage:
Increase your monthly payments
When you agreed to your mortgage, you signed a contract that stipulated you'd pay x amount each month for a specific period of time. This is very basic loan repayment stuff, and it basically helps you figure out your monthly payments and how long it will take you to be free from your loan. After a few years, you may realize that you're not paying enough. Or, more accurately, you're not paying as much as you probably could. This tends to happen if your source of income increases or you start saving more money and being a bit more financially savvy as a family. Either way, you realize you've got some extra money that could go towards the mortgage payments.
In this case, contact your mortgage lender and speak to them about increasing the monthly payments. As long as it doesn't have a negative impact on your life, this is a smart idea to reduce the mortgage terms. By paying more every month, you'll require fewer months before the entire mortgage is paid off. Plus, if your career keeps going in an upward trajectory – or your partner gets a better job – you may be in situations where you can pay even more every month! Again, contact the lender and get the deal restructured so you can increase your payments yet again.
Theoretically, this is a genius way of shaving many years off your mortgage. There are only two downsides to this: you will still have years to go before the mortgage is paid off, and it only works for people that are earning more money. If you're having issues with your mortgage due to a lack of funds, then this isn't a viable option for you.
Next up, you can pay off your mortgage fairly quickly when you start refinancing it. Firstly, what on earth does this term mean? Simply put, home loan refinancing is when you take out another mortgage to pay off your original one. In that sense, you can technically pay off your first mortgage all in one go.
The reason refinancing exists is that it lets people have access to more affordable mortgages. If your current mortgage was on a fixed rate for the first three years, the fourth year may bring a substantial increase to the interest rate. Without trying to get too complicated, this basically means the mortgage costs more because you're paying more interest. So, you can refinance this loan with another one that has much better interest rates. Therefore, you save money overall when paying off your mortgage.
Also, there's a way of using refinancing to keep switching loans after the fixed interest rate is up. If you do it correctly, you can end up shaving lots of years off your mortgage, and save lots of money in the process. Unfortunately, I'm not a financial expert, so you won't get this information from me. Just Google refinancing or remortgaging, and you'll find loads of tips on how to use this method to pay your mortgage as quickly as can be.
Again, the downside of this idea is that, while you do shave off some years, it still doesn't offer a short-term solution. The plus side is that it's a great option if your current mortgage is too hard for you to keep up with. You can switch to another one with a better interest rate, meaning you can keep up with the payments. Technically this can also stop you from falling behind on mortgage payments, which would only drag out your loan even longer.
Sell your home
Finally, the quickest way of paying off your mortgage is by selling your home! Granted, you might not want to sell your family home, but it may be necessary if you're struggling with the mortgage. The good thing about this is that house prices generally increase with time. Plus, any improvements you made to your property will up the price from when you sold it. Therefore, you could sell it for a profit, paying off your mortgage with these new funds. However, you may have enough money left over to afford a new house.
Consequently, you can move into a new house without needing another mortgage – or possibly getting a small one that can be paid in a couple of years. This method works best when you're thinking about downsizing or moving to another country or city. In either of these cases, the cost of a new home could be substantially cheaper than your current one. Thus, after the sale and the repayment of the mortgage, you have more than enough to get a new home.
Mortgages aren't the most enjoyable things to talk about, but most of us have to deal with them. If you're sick and tired of the burden of your mortgage, these three tips should give you some new ideas. Look back through them again, do some extra research if you need to, then consider which one is best for your current situation. Whichever one you pick, it's sure to help you repay your mortgage much faster than at the current rate.