Nothing is better than being debt-free. It is truly an amazing feeling when you sit down to make the monthly budget and don’t have to put a good chunk of your earning into the debt repayment.
There are many bills that are considered to be draining and long-lasting, like student loans and mortgage but, with proper planning and financial budgeting, you can pay off your bills quicker than usual.
Loans and debts are quite difficult to manage but, there are various ways and steps you can take to speed up the process, such as these three simple steps.
1. Consider Shortening Your Mortgage Term
Finance Expert Eleanor Williams suggests that people who are spending their time at home or those with a good disposable income should consider reducing their term. This means they’ll increase their monthly mortgage payment, but on the other hand, it can help them to pay off quickly and avoid the extra interest cost.
2. Recheck Your Monthly Budget
Most of the time, people tend to spend money on things that are not really a necessity, and by avoiding them, you can save up a good amount of money. Going over your monthly budget can give you a good evaluation of what you can do to save money.
3. Think About Offset Mortgage
The entire system of mortgage and repayment is complicated, but it is not like you can’t use it to your benefit. If you switch to offset mortgage, this loan is kept separate within the same bank.
These savings are then used to lower the interest rate. While you may not get any interest for your savings, but it can help you pay off the debt with reduced interest.
Why Paying Your Mortgage Quickly Is Important
When it comes to housing and being a homeowner, many people are left with no choice but to compromise on essential necessities to pay off their debts, which is because of two main reasons. Firstly, if you pay them off quickly, you have higher chances of saving up for your future, and secondly, you will have to deal with less interest which grows larger every passing year.
In some cases, there are lenders that will give you the option to overpay up to 10% of the outstanding mortgage in a single year but, this is relative.
So, before you go on about paying it, make sure to confirm it with your lender. However, if you overpay more than your required amount, then you will be subjected to penalty fees.