Buying a home is a big purchase. No, that’s an understatement, buying a home is probably the BIGGEST purchase most people will ever make. If you like the idea of leaving an extra $100,000 in your pocket over the course of your home loan, we have some tangible ideas you can use. Unless you are the rare homeowner who is able to pay cash when you buy, you have probably secured a mortgage. It’s common knowledge that your mortgage’s interest adds to the final cost of the home by the end of the loan’s life. Paying interest each month, you will eventually spend tens of thousands of dollars on interest.
We have put together three of our favorite methods to help you shave off some of your interest payments, possibly resulting in a savings you can really “take to the bank.”
- The Baker’s Dozen- A baker’s dozen is 13. This idea of a bonus is a great way to look at paying your mortgage. If you know you will make some extra money during your financial year, you can use that to pay one extra payment. By doing this each year, you will significantly reduce the length of your loan and save thousands of dollars.
- Divide and Conquer- Add an extra 1/12 to your monthly mortgage payment. If you do this from the beginning of your loan, you will never notice the difference in your monthly payment but will pay off your home much sooner. In turn, you will be able to see a savings over the years that your bank account will appreciate.
- Pay on Payday- If you happen to work for a company that pays biweekly (as opposed to one or two times monthly) you can set up an automatic transfer to pay half of your mortgage on each biweekly payday. This is an effortless way to pay an extra mortgage payment each year without feeling much (if any) financial pinch!
It doesn’t take much to make a real difference over the course of your home loan. If you implement one (or more) of these ideas, you will be guaranteed to see a difference that will give you more financial freedom and stability in the future. And who doesn’t want to find that?
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