Paying your mortgage as fast as possible can save you thousands of dollars of interest. On top of that, paying your mortgage eases a lot of stress without that big bill coming in every month. But paying your mortgage in advance needs careful planning so you can do it wisely and in the most cost-effective ways.

Biweekly payments

Many homeowners are choosing to pay their mortgage in biweekly payments instead of the standard monthly payments. Even if you are almost paying the same amount each month, the difference is that you are saving interest on the increase. On top of that, paying fortnightly means that you are paying the equivalent of 13 payments each year (52 weeks) instead of the 12 standard payments you would be making if you would pay each month. Based on a 30-year mortgage of $ 100,000 with a 7% interest rate, you can save almost $ 35,000 on the mortgage course and pay your home six years earlier compared to monthly payments.

Use bonus money

Before making any large payments on your mortgage, make sure your contract allows. Some may prohibit large payments or may have financial penalties for doing so. However, if you are allowed to make large payments periodically, use your bonus money or any other large amount of money you periodically get to apply to your mortgage. Christmas bonuses, tax refunds, and birthday money from your grandmother can help you pay your mortgage several years ahead of what you planned.

Make larger payments

Your financial situation usually improves in the course of a mortgage. Most people go up in their company, get promoted or just get better jobs over the years. When this happens, discuss the possibility of increasing your payments with your mortgage lender. Even increasing them by $ 50 or $ 100 each time will make you pay your mortgage sooner than you thought.

Refinance at a lower interest rate

Refinancing is an ideal way to pay off your mortgage faster. If you have better credit than you had when you first financed your home, you are probably eligible for a lower interest rate. This means a lower overall total on the mortgage. However, when you do this, consider a shorter term for your mortgage. For example, if you have a 30-year mortgage now, consider a 15- or 20-year mortgage. Your payments are likely to be slightly higher, but you’ll save yourself thousands of interest in the years to come and pay your mortgage much faster than with a 30-year plan.