If you have taken a home loan, you knew from the very beginning that you were getting yourself into a long-term commitment. As time went by though, you may have realised that you want to get it over with the loan sooner than you have expected. What now? Should you simply wait around for the following decades and make your usual payments on time or should you do something about it?
There are many things you can do to decrease the total sum of your home loan faster (and to pay off the loan sooner as well). I was reading about the application process and what to expect on 1300 HomeLoan and it is a big step so you want to make sure you’re doing it right. The following tips will help you do this:
Shortening the Term of the Loan
This is probably one of the most straightforward solutions you have. Simply renegotiate the terms of your contract with your mortgage company and see if you can shorten the term of your loan. Shortening even from 30 years to 25 years can go a very long way when it comes to the savings you will make (which can go as high as nearly $100,000 only from interest rates, depending on the sum of money you borrowed originally).
Again, this is an easy-to-understand path to lowering the amount of your home loan sooner. Making larger payments each month can save you thousands and thousands of dollars in interest rates – and, on top of that, it will also shorten the term of your loan as well (sometimes, with a good bunch of years). Even paying an extra as small as $50 can work wonders if you want to pay off your loan sooner and decrease its total amount!
Pay in Lumps
Some people prefer paying off their loan in larger lumps. However, make sure that you inform yourself beforehand because some financial institutions will perceive an extra-fee for people who want to pay off their loans in large lumps sooner than the contractual period stipulates it. This sounds surprising indeed, but when people make lump payments on their loans, the mortgage institution will waste precious interest money away – and they are not particularly keen on liking this. Therefore, ask your loan officer about this and only start making steps towards it when you are as certain as possible that you will not end up paying that extra-fee.
Ditch the Monthly Payment
This is not to be understood as “stop making payments altogether” – on the contrary actually. Instead of making one payment each month, switch to making bi-weekly payments. It may feel that you are just stretching your payment out, but in fact you will be adding two extra-payments every year and this can save you a lot of time on the long run as well. Furthermore, it can save you many thousands of dollars in interest rates – and that’s a very much appreciated bonus!
Informing yourself is absolutely essential if you want to decrease your home loan fast. Also, make sure that you never make any kind of move without asking your bank’s representatives first! Keep yourself well-calculated and cautious and you will reach your goal sooner than you even think!