The only way most people can buy property nowadays is to take out a mortgage. These massive loans can take a lifetime to pay off – some people never pay off these loans and take these debts to their graves, resulting in their loved ones inheriting these debts. Others can pay off their mortgages early and live a debt-free existence. Having no mortgage could leave you with a lot more disposable income each month. Paying it off is possible if you’re dedicated enough. Here are just a few tips for paying off a mortgage.
Improve your credit score
Before you take out a mortgage, it’s important to have a good credit score. This can allow you access to much better deals with lower interest rates that could make your mortgage much cheaper in the long run. A bad credit score is usually the result of having too many debts or missing payments often. Fortunately, you can fix a bad credit rating. There are lots of guides on how to repair your credit score online. These may include taking out a credit-builder loan or getting on the electoral register.
There are lots of mortgage lenders out there and it pays to shop around. A mortgage broker could help you to find the best rates. You often have to pay these brokers for their services, however it could save you money – many mortgage brokers have access to exclusive deals with extra low interest rates. If you already have a mortgage, you can always remortgage with another lender. This could be worthwhile if your mortgage had an adjustable interest rate and is now charging you a ridiculous amount each month.
Never miss a payment
Missing a payment can often result in penalties such as increased interest rates or extra charges. Make sure that you’re always making each payment on time with the full amount. After several years of regular payments, some lenders may even reward you by lowering interest rates.
Throw extra earnings at your debt
If you win money off a scratchcard or get a bonus at work or inherit some savings, don’t immediately use this money on a holiday or a new dress. By paying off an extra slice of your mortgage with these earnings, you could pay your debts off quicker and be closer to a mortgage-free life.
Be careful when upsizing
Buying a bigger house could mean taking out a bigger mortgage. Selling your previous home will give you some money towards it, but you’ll still be extending your debt. Downsizing could have the opposite effect, giving you a profit to then use at your own leisure (this can be a great retirement strategy if the kids have moved out and you no longer need all that space in your home). Alternatively, you could find somewhere that’s about the same value as your previous property, pay off your mortgage and own the property for yourself.