Pay Off Your Home Loan Faster : Do you have a home loan and want to pay it off faster? It’s an achievable goal! With a bit of planning, budgeting, and dedication, it’s possible to make a dent in your home loan and pay it off early. By following the 7 strategies we’ll discuss, you can save thousands in interest and become mortgage-free faster than you ever imagined. Ready to find out how? Here we go!

1. Calculate Your Home Loan Affordability

Before you decide to make extra payments, you’ll want to check to see if your lender will allow it. If your home loan is under a standard 30-year repayment period, you’ll likely have to pay off the entire home loan before you can change your terms. But, if your home loan is under an extended repayment period, you may have more options. You’ll want to check with your lender to see what your options are. If you’re approved to make additional payments, you’ll have to decide how much you can put toward your home loan each month. To calculate the affordability of extra payments, you can use a home loan calculator.

2. Make Additional Payments

As mentioned above, if your home loan is under an extended repayment period, you can make additional payments to pay off your loan faster. Just keep in mind that if you make additional payments, they will go toward the balance of your loan immediately. Therefore, they won’t help you save money on interest over the life of your loan.

However, if you’re paying off your loan faster, you’re paying less interest over the life of your loan. That’s a win-win if you ask us! You can make additional payments on your home loan once a month or whenever you have extra money available. If you’re making a monthly payment of $1,000 and you want to make an additional payment, simply take $100 from that monthly payment and apply it to your home loan.

3. Make Bi-Weekly Payments

Making bi-weekly payments instead of monthly payments can shave years off your home loan and save you thousands in interest. With bi-weekly payments, you’ll make 26 payments a year instead of 12 payments a year. Doing so will add one extra payment to your loan every year. By making an additional payment every year, you’ll reduce the length of your home loan by one full year. That means you’ll save thousands in interest.

To make bi-weekly payments, you’ll have to pay a little more each month. Depending on the amount of your home loan, you’ll likely need to pay $50 to $100 more each month. That might seem like a lot at first, but it’s well worth it. With bi-weekly payments, you’ll save around $46,000 over the life of your loan. You’ll also get your mortgage paid off years sooner than if you’re making monthly payments. So, if you’re interested in making bi-weekly payments, you’ll have to discuss it with your lender. They may allow you to make bi-weekly payments, but it varies from lender to lender.

4. Refinance Your Loan

Refinancing your loan is the best way to save on interest. When you refinance a home loan, you’re taking out a new loan to pay off your old one. If you find a lender who is willing to give you a lower interest rate, you can use the money from your new loan to pay off your old loan. You may have to pay closing costs with a refinance, but those costs will be worth it in the long run.

By refinancing your loan, you could save thousands in interest. You’ll also shorten the length of your loan, which will help you get out of debt quicker. If you have a good credit score, you should qualify for a lower interest rate if you’re refinancing your home loan. Note: If you have an underwater home loan, refinancing your loan might not be an option for you. Check your home loan details to see if refinancing is an option for you.

5. Utilize A HELOC

If you have equity in your home, consider taking out a home equity line of credit (HELOC). A HELOC is a type of second mortgage that allows you to access the money you’ve built up in your home. With a HELOC, you have access to cash whenever you need it. You can use a HELOC to make home improvements, pay off debt, or cover unexpected expenses.

Since you’ll have quick access to cash, you’ll be less likely to turn to credit cards or other high-interest debt. However, HELOCs come with a high interest rate. Therefore, it’s best to use a HELOC for short-term needs and pay it off as soon as possible.

6. Make Use Of Windfalls

Are you expecting a tax refund or a bonus at work? If so, why not apply them toward your home loan? Instead of spending that money on a vacation or a new car, put it toward something that will benefit you in the long term. You can put that money toward your home loan and make significant progress toward paying it off.

If you receive a tax refund, put it toward your home loan instead of giving it to the IRS. You’ll have your home loan paid off years sooner, and you won’t have to deal with the hassle of filing taxes. If you receive a bonus at work or a pay increase, put that money toward your home loan instead of spending it on something frivolous.

7. Make Extra Payments When Possible

While it’s great to make bi-weekly payments or extra payments with money you have on hand, there are other ways you can save money on your home loan. For example, you can save money by putting down a larger down payment when you purchase your next home. A larger down payment will help you secure a lower interest rate.

With a lower interest rate, you’ll end up paying less in interest over the life of your loan. You can also lower your home loan payment by refinancing your loan. If you take out a lower-interest loan to pay off your current home loan, you’ll end up saving money over the life of the loan. You can also improve your credit score, which could lower your interest rate, saving you money on your next home loan.

Also Read : 8 Essential Things to Consider Before Taking A Loan