Pay off your mortgage early to save money

You don’t have to wait 30 years to repay your mortgage. Pay it early and save money.

09:05 17 August 2013

A mortgage is usually a 30-year commitment. Although for some people this is perfectly fine, there are those who may wish to pay if off ASAP not only to save money, but also to free up some money that they can use for other things (such as buying new cars or sending children/grandchildren to university for example).

Here’s how you can easily pay off your mortgage earlier than expected:

• If you’re in the process of applying for mortgage, consider taking a 10-15 year term instead of the usual 30 years. Although this means higher monthly payments, it would also translate to lower interest rate and shorter loan term. If you do your math, you’ll see that you’ll save much money if you go down this route.

 

• Make overpayments. Another thing that you can do is to make overpayments. This means paying more than your monthly mortgage fees. If you suddenly find yourself with extra money, perhaps you get bonus at work or received inheritance; you could use the money to pay part of the money you borrowed. This can either shorten the loan term or reduce the interest rate.

 

• Consider offset mortgage. This is where you can use your savings or checking account to offset the interest you pay for your mortgage.