A mortgage is usually a 25 year loan, which can feel like it goes on forever. Some people are happy to just pay what is required each month and pay it off when it is due. However, other people would rather get rid of the debt more quickly and get it paid off as soon as possible. If you are one of these people then here are some tips on how you can pay it off more quickly.
It is wise to look at the mortgage deal that you have and make sure that it is competitive. If you can reduce the costs of your mortgage, then you can use this money that you have saved to pay a bit more off each month. Therefore it is wise to look around for a better mortgage deal and perhaps swap lenders every five or ten years. It is wise to be cautious though as there will be fees associated with this. You need to make sure that you are aware of all of those fees and make sure that it is worth switching lender still. Calculate how much you will save and how much it will cost you and decide whether it really is worth it. It is also wise to look at switching any other financial products you have associated with the mortgage such as life assurance and house insurance as these costs can also add up over the years and it is very easy to switch and usually does not cost anything.
Pay extra each month
In order to whittle away at the mortgage it is wise to overpay by a bit each month. This will only be possible with certain types of flexible mortgages, but see whether you are able to do it. The reason that this works well is because you will be charged interest on less money each month if you pay off more of the outstanding balance and so your costs will decrease each month. It may be slow to start with but it can make a significant difference in the long run. There are circumstances when this is not so good financially though. If you can invest the money and get a better return on it than if you pay off the debt then this is better. However, normally you will pay more to a lender than you will get paid in interest on savings. However, some investments may pay out more but they are likely to be more risky so you will need to take care.
Cutting spending to put more money aside for paying off the mortgage can be a way to help get the debt paid off more quickly. It is not always easy to do this, but it is wise to look at spending every 3-6 months and see whether it can be reduced. Things like utilities can be switched to save money and although this takes time, it is unlikely that you will notice any difference to your lifestyle and so it can be a really good way to cut back. Cutting back on luxuries can also be a way to save, but you will have to decide whether this is something that you are prepared to do. Perhaps spending less on gifts, charity donations, clothing, holidays, home improvements and things like that can be achieved. It can be wise to take a look at everything that you buy and consider where you can cut back in order to pay that mortgage off more quickly.
Increasing income is a way to get more paid off without having to cut back on your spending. This can be done in many ways, but some are easier than others. It can be a good idea to see whether you can get a better paid job, perhaps within your company or by moving companies. You could ask for a pay rise in your current position too. Another option is to get a second job. This could perhaps be an evening or weekend job. You may wish to start your own company, sell things that you make or produce or work for someone else. If you do start a company, try not to invest too much money as it could end up being a cost rather than an income. You could also sell things that you have to make a lump sum of money. If you have a spare room, you could consider renting it out. You may also be able to rent a garage or driveway to make some additional income, if you have one and there is a demand in your local area.
If your home is large, then you could consider downsizing. This will allow you to pay off some of your mortgage with the difference between the price of your current home and a cheaper one. Obviously this may not be an option for everyone, it depends on where you live, how much room you need and what is available. It can be something that some could consider though. You may even be able to get a larger home in a cheaper area and save money that way. It is worth just looking to see what is for sale, what you could get for your home and whether it could make a significant difference if you moved. There are many costs of moving though such as solicitors, estate agents, removals and decorating so you will need to allow for these when you decide whether moving is the right thing for you to do.