Save Thousands By Prepaying Your Mortgage

Save Thousands By Prepaying Your Mortgage



Save Thousands by Prepaying your Mortgage
If you’re determined to​ cancel your home loan as​ soon as​ possible this is​ not a​ bad idea,​ you​ can put extra money towards the​ loan but there are some things you​ need to​ be aware of.
Depending on​ the​ amount of​ money you​ destine every month towards your home loan you​ could reduce the​ length of​ it​ from months to​ years and of​ course you​ would be paying less interest on​ the​ principal as​ you​ would be reducing it​ systematically .​
Interest or​ Principal
However,​ there are some home loans in​ which you​ pay first the​ interest and then the​ principal so if​ you​ put more money towards the​ loan you​ would just be giving the​ lending institution an​ advance which is​ pointless .​
Prepayment penalties
There also some loans that have prepayment penalties .​
Since the​ lending company earns money from interest they want to​ make sure you​ won’t pay off the​ loan in​ advance and thus reduce what otherwise they would be gaining,​ thus,​ they charge a​ percentage on​ the​ outstanding amount .​
If this is​ the​ case you​ will need to​ consider whether you​ would benefit from paying off the​ home loan sooner .​
Perhaps it​ would be wiser to​ just carry on​ with the​ scheduled repayment program .​
Building Equity while reducing debt
If you’ve read the​ small print and there are no prepayment penalties and the​ interest rate and principal are balanced,​ then you​ can put more money towards paying the​ loan sooner and benefit from reduced interests and a​ reduction on​ the​ length of​ the​ loan also .​
And as​ the​ remaining debt decreases you’ll be building equity on​ your home which will let you​ get extra money from your house to​ make repairs,​ go on​ vacations,​ buy a​ car or​ any other purpose .​
Other options: Financial Advice,​ Refinance
If you’re not sure about your decision,​ don’t hesitate to​ contact a​ financial advisor,​ there are also many online sites offering advice on​ mortgage and mortgage refinance .​
You can always contact them if​ your current lender won’t give you​ a​ solution to​ your needs .​
You can always refinance your home with better terms if​ the​ current market situation is​ better than it​ was when you​ acquired your loan or​ if​ your financial situation and income have improved.




You Might Also Like:




No comments:

Powered by Blogger.