If you are a homeowner then your biggest expense every month is probably your mortgage payment. With every payment made, you inch a step close to a safe and secure future. Your home is your biggest investment and will help your family and yourself secure when you retire, and when there are big and unforeseen expenses that you may need to make. But did you know that you can save a lot of money on your mortgage each month if you make the right moves? Here's How!
Use the home equity well
As a homeowner, you may very well be aware that your house is an asset, an investment, which if used well can help in saving a lot on the monthly payments and even make paying off your debt faster with a better rate. Faster mortgage payments are good, but they are not for those who have high-interest credit card debt to pay off. This is simply because when you already have a big debt to pay, making more payments toward the house doesn't make sense. So what do you do in such a situation? You could use your home equity to pay off the debt and have less accumulated interest. If you are in debt that a cash-out refinance can be immensely helpful. In this way, you can refinance the mortgage and in the process also get cash payment for a majority of the equity you have in your home. This can then be used to pay credit card debts. What's more, you are now down to one monthly payment (towards the mortgage) and it may crank up that credit score too! It is a win-win situation.
Consider making bi-monthly payments
If you make your mortgage payment twice every month or once in two weeks, you can pay off the mortgage at a faster rate. You may not notice much of a difference and will end up making one extra mortgage payment every year. Since there are 52 weeks in a year and with bi-weekly payments you pay 26 times a year which is equal to 13 full monthly mortgage payments. This is a great situation for you without feeling that pocket pinch. The faster you pay off the mortgage the more you save. Pro Tip: Check with the lender if they charge an extra fee for this arrangement. If they do, then do not go for the bi-monthly payments option as you may end up paying more and it isn't worth the trouble.
Additional annual payments
If your lender charges extra for the bi-monthly payments, there are other things you can consider. You could use any work bonus, birthday money gifts, or any windfall you get towards paying off the mortgage. We would like to tell you that even one extra payment can make a big difference in your entire mortgage term. If you can't make a big payment like this, then certainly try making smaller payments to pay off your mortgage faster.
If you too want to save money on your mortgage or have any questions or doubts about your mortgage payments, do write to us at LendX Financial in Brampton, Greater Toronto Area.