Pay Mortgage Faster


Basic Rules On How To Pay Off Mortgage Faster

When it comes to a how to pay off mortgage faster plan it has to be approached from the point of view of considering a debt solutions strategy.

For example if you haven’t already purchased a property and committed to a mortgage then there are possibly some important considerations before you do.

Developing Money Management Skills

House in life raft with umbrella over it

Nonetheless, the most important element of how to pay off your mortgage fast is applying good money management skills. If you don’t already have these skills and you’re genuinely into improving your standard of living and quality of life then learning these money saving tips will pay handsome dividends.

If you already have a home loan then picking up on how to pay off mortgage faster ideas quickly may have to be approached from a slightly different angle.

Finding The Right Debt Solutions

Let’s look at the first situation. Let’s assume you’re now considering your first home loan and you’re now ready to purchase a home. The best mortgage advice for you is to have the presence of mind to want to find debt reduction solutions that will show you ways on how to pay off the mortgage faster.

Affordable Home Loan Debt.
The single most important thing you can do in this situation is to keep your home loan debt well within your affordability capabilities. This may mean purchasing a home below your ultimate dreams and desires and getting a home loan for less than the maximum the bank is willing to lend you.

Why is this? This will allow you to take advantage of the two most important dynamics of property equity creation, faster debt reduction and capital growth.

Money Saving Tips

By not having a home loan so large, the interest you have pay to the bank every month won’t eat up every last dollar of your disposable income. By utilising these kinds of money saving tips means you won’t be placing a ball and chain around your ankles for the next 30 years.What's your mortgage free dream

You’ll have money left over each month that can be used as extra home loan repayments towards the principal balance of your home loan.

With the second scenario where you already have a home loan and there is no money left over at the end of each month to make extra home loan repayments, then a different strategy will be required. This will be in the form of learning how to develop more money saving ideas.

From this point forward the following information will be relevant to both scenarios.

Mortgage Offset Account Debt Solutions

One of the important how to pay off mortgage faster tips is to use a mortgage  offset account.

How does an offset account work to your benefit?
Offset accounts work like any of the normal savings/chequeing accounts in that you can use it for your everyday banking transactions. The big difference is that any money you have sitting in a mortgage offset account on a daily basis helps offset the interest payable on your home loan.

In other words let’s say you have a $300,000 mortgage and you have $10,000 sitting in your mortgage offset account. Because of the way offset accounts work, the 10,000 offsets against the $300,000 and you only pay interest on $290,000 for as long as the $10,000 remains in the account.

Offset Accounts Utilise Modern Technology

Furthermore, with modern technology offset account balances are monitored on a daily basis. Therefore, if the offset account balance changes because of additional incoming payments and other deposits this is tracked accordingly and the final interest bill is charged back to your home loan account at the end of each month. This is known as interest charged monthly in arrears.

Use An Interest Free Credit Card To
Help Pay Off Mortgage Faster

Gold figure riding a credit cardYou can also enhance the performance of your mortgage offset account by using an interest free credit card to charge as many of your monthly expenses as possible to the card.

To further facilitate the benefit of this strategy most lenders will allow you to set up an automatic electronic sweep for any balances on the card at the end of the month to be swept back into your offset transaction account.

In the meantime, you’ve been able to use the banks money interest free by not having to take extra money out of your mortgage offset account, which while it’s still sitting in there is offsetting against your home loan and saving you even more interest.

More details of how to take advantage of interest free credit cards and offset accounts will be dealt with in an additional page on this website to be created in the near future.

How To Be Good at Money Management

There is a real skill in learning how to be a good money manager so you are able to pay yourself first at the beginning of every pay period as opposed to giving all of your money away to others every month.

Also, there are other great benefits to being good at money management besides just financial ones and that is in the way of a better quality stress free lifestyle.

Many people live on the edge of financial disaster for most of their lives. In fact if they lost their jobs tomorrow many would not have enough cash put aside to support themselves and their families for 3 months. It’s wise to discipline yourself and figure out debt solutions that will enable you to spend less than what you earn so you don’t end up like those that have to seek out loans for people on centrelink.

More Money Saving Tips

Seek out money saving tips that will give you enough extra free cash to allow yourself to pay an additional $120 per week into your mortgage. This  will save more than $152,000 dollars in interest charges on a 5.3% 30 year home loan. It will also reduce the home loan term by over 10 years.

For those that find saving money voluntarily is difficult there are ways to establish debt solutions that make it easier to channel that extra money into the mortgage loan.

There’s an old philosophy that says necessity finds it own level (a bit like water).

Pay Off Mortgage Faster With Fortnightly Repayments

One of the debt solutions about how to pay off mortgage faster strategies that can help those that find saving money difficult can be to make the principal andDebt reduction road sign interest repayments fortnightly. However, don’t let the bank calculate the fortnightly repayment, because they will take the annual repayment amount and divide it by 26, leaving you no better off.

No, you take control of this and take the bank calculated monthly principal and interest repayment and divide that by two. The result of this calculation now becomes your new fortnightly repayment.

As there’s on average 4.33 weeks in a month, by paying this amount you will end up making one whole extra repayment a year.

Another How To Pay Off Your Mortgage Fast Tip

While home loan interest rates are low consider calculating your home loan repayments at a higher interest at say 7.5%. Then calculate what the monthly principal and interest repayment would be at that interest rate and discipline yourself to start making that payment amount.

I can hear some of the protests already. About not having any money left over at the end of the month already, where am I going to find the money to do this?

This is all about learning the money management skill of how to pay yourself first. It means making it a priority in your life to learn this skill. It means having to take responsibility for your own future.

Positive Cashflow Property Investment Tip

Debt is not  a bad 4 letter word signOne productive goal that can be used on how to pay your mortgage off fast is to use every trick in the book and reduce the principal balance of your home loan to down below 70% of the value of your property.

This will then allow for enough equity to purchase another property for investment purposes. However, the how and when of buying an investment property needs to be carefully reached and the property finance structured correctly with an interest only mortgage in order to ensure it’s a healthy positive cashflow property where the excess cash flow can be channeled into the existing owner occupied home loan to help pay it off even faster.

Spend some time on researching how to pay mortgage off faster strategies and become the next home loan winner.

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