How To Pay It Back Easily And Quickly
After some initial struggles and efforts, you have finally got yourself a house by using mortgage. You must have felt satisfied and joyful, right? While this is indeed a happy occasion but let me remind you 1 thing: this is usually the largest loan a person will take in his/her entire life and the potential that the loan will remain even after he/she has gone into the other world is not low if there is not a proper planned and calculated payback schedule. So you had better start putting together a plan to pay it back as soon as possible or the house of your dream will be taken away right before your eyes. These suggestions may assist your process.
- 1. Evaluate your financial capability and annual income and combine them with current situation
Estimate how much can you earn and how many percent can be used to payback mortgage. This is not simply throwingyour money there whenever you have them. Put in some serious consideration about how you can solve the mortgage at a faster pace. While the interest of mortgage will pile up eventually, you may want to look for extra opportunities to get more money. Consider putting some money into the bank or stock market if there is a good chance that you can make a good profit. “Good profit” here doesn’tmean larger than your initial investment, it must be also high enough to offset the interest rate of your mortgage. This is called “opportunity cost” consideration.
- 2. Make payment early and over the interest rate
While the principal debt won’t go up, your interest will accumulates over time so the longer you have to take to make payments, the more you have to actually pay to secure your house. The point is that in the first couple of years of mortgage payments, the interest you have to pay is considerably lower than later so try to pay higher than the interest and attack the principle debt. This will relieve a huge burden off your shoulderin later payments: The lower the principle debt, the less interest you have to pay. This is a rather simple strategy but the result will be immensely helpful. Speed and determination are keys to accelerate your mortgage payment and therefore reduce the overall money you have to pay.
- 3. Weighing your options
In reality, there are probably more to think and consider in your life than just mortgage payments. Try asking yourself these questions to make sure that you are not wasting too much moneys and efforts for a rather short and temporary goal which might be eliminated if you can’t keep up with the payment plan:
“Am I going to stay in this place for long?”. Usually people use mortgage loan to get a house that they will live for long time. Still, if you happen to get a place to stay for about 10 years or lower and move elsewhere after that then the whole idea may not be worth it.
“Can I keep up the payment schedule?”. There are many other expenditures that require your attention beside mortgage such as your children’s tuition fees, medical bills, electricity bills, investments, etc. The idea is to pay more in a short period of time in order to reduce the cost in the long run but there are many reasons and aspects of life that will interfere with this so be absolutely sure that you can handle themall.
“Should I just stay with the schedule suggested by the mortgage loan lender?” Well that is a way to do this but do remember that the first thing the lender care about is his own profit and schedule, not yours. So you yourself have to set up a payment schedule for your own. And always keep in mind that If you want to reduce the cost then push up your payment schedule and get rid of the mortgage loan as soon as possible.