Five Ways to Shave Off a Chunk of Your Home Loan Term!
Your home loan is the largest financial commitment you are likely to make throughout your life. It is the commitment with the longest term – but you can change that. It is advisable to take every measure that you can in order to pay up your bond quickly as you can save a lot of money in the long run. Whether you shave off a year or a decade from your home loan depends on how hard you work at repaying the balance and how much effort and money you place into it.
There are a handful of smart ways that you can beat the bank and help you finish off your loan early. Consider employing any one of the techniques described, or better still, a combination of them as your budget allows.
Get Rid of Other Debts
You can’t tackle on beating down your home loan payment if you’re also making retail account, car, and credit card payments! Many people have all these bills to pay and more. In this case, the very first measure you should take to help you get in the clear is to close off all short-term debt before you look at how you can close off your long-term home loan. If you know that your willpower is weak, then don’t have the temptation of a retail account card with a high credit – either cut up the card and say goodbye or drop the credit amount to something very low. Your short-term debt serves as an obstacle to you chopping your home loan term in half!
If you’ve been saving up funds for a rainy day, consider this rainy day! Cash up all your emergency savings funds and pump them into your bond account. This is the best move to make, especially if you have an access bond. If it so happens that an emergency does make a nasty appearance, your funds are accessible. If it is too tempting, have only a portion of the funds accessible. Find other ways of generating extra income and use that income to pump into your loan account – like selling all the furniture, toys, clothes, or other unnecessary junk that is just collecting dust at your home. Deposit all proceeds to your home loan.
Raise The Bar
Adjust your loan payment amount by a figure that fits int your budget. Make sure that whenever your budget allows you to add in extra in your month yond payment, that you go ahead and increase it. Whatever extra money you squeeze into your monthly payment ill actually help you a whole load more than you actually think it will. Use a mortgage calculator online and plug in your loan balance, the interest value, and the term remaining to work out how much you will be paying back paying your current monthly payment versus a payment with a little extra.
Put Your Pay Raise and Bonus To Good Use
Instead of splurging your bonus and your salary increase, consider injecting the funds into your home loan balance and watch your principle balance drop! If you don’t want to use all of it in your bond, at least allocate a considerable chunk of it towards your balance. If you need some convincing, try to work out the difference it will make in your savings over the entire term of your loan agreement. Seeing exactly what difference that amount will make to your pocket might help you make the right choice!
Set target dates to work towards. If you cannot work towards paying off your entire loan in the near future, consider at least setting a target amount or lump sum that you will save up to deposit into your home loan. By doing so, you are keeping to your goals and making progress that you can measure and feel good about. The feeling of reward will be enough to keep you aiming for your next goal!
Now that you are equipped with the tools necessary to shave off chunks of your home loan term, make sure you adopt some of them or a combination of them so that you can enjoy financial freedom in your life sooner rather than later. Don’t make the banks richer! Paying your home loan at the minimum amount is what the banks want you to do so that they can maximize profits on your debt! Beat the bank!
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