Buying a home for the first time can fill anyone ready to start a new life with excitement, whether as a single or with their partner. In case you already have the initial installment of your future property ready and you are concerned for how long you will have to pay the lender, at Q’PASA we tell you how you can pay your mortgage ahead of time.
To begin, you must bear in mind that different financial advisers do not recommend having a period of time greater than 30 years to finish paying a mortgage; and that neither, more than 32.5% of your monthly income is allocated to this debt.
For this reason, it is suggested that it is better to have a “financial cushion” to pay the mortgage before the established term, as this way you can save a significant sum of money in interest.
Before considering making the advance payment of the mortgage, it is essential that you keep in mind if you do not have extra obligations that you must urgently attend to. Also, in case of an emergency that involves your economy, you should be aware that you will need a savings account that has a minimum coverage of five to six months.
If you think you are ready to take on this investment and want to pay it off ahead of time, you should take into account:
- Overpaying monthly or making extra payments
Even if you think that you will have to pay at least $ 500 more to finish paying the mortgage as soon as possible, the truth is that with only $ 20 you can make a big difference in interest.
If you feel like you can’t save money for your mortgage, you can make additional payments once or twice a year. If you are lucky enough to receive work bonuses, you can take advantage of them to make payments in advance.
- Cut some extra expenses
If you don’t know where to get those extra 20 dollars to consign to the mortgage, you will only have to cut little necessary expenses. For example, expensive hot drinks, eating every day in restaurants, taking a taxi to work, etc.
Although they seem like very small efforts, you will see that every penny will count for you to pay off that hefty debt.
- Refinance debt
If you are lucky enough to get a better salary, you can talk to your lender to refinance the mortgage in a short term. For example, if you have a fixed rate for thirty years; where the interest rate is 3%; the monthly payment of US $ 1,054.01; the total interest payable would be US $ 129,444.63.
But, if that fixed rate is for fifteen years; with an interest rate of 2.25%; the monthly fee of US $ 1,637.71; In the end, you will have to pay US $ 44,788.15 for the interest. That is, with this you would save US $ 84,656.48.
- Refund the loan
Through ‘mortgage consolidation’, monthly debt payments can be reduced, only if a lump sum is applied to the principal of the loan. In other words, the mortgage is amortized, but the loan is now “recalculated” with the lower balance; therefore, the monthly payments would be much lower.
If you are ready to assume the mortgage of the largest investment of your life and you are looking for a property in Toronto or Ontario, Canada, you can contact the real estate sales representative, Luis Briceño, who guarantees “commitment and dedication in the purchase and sale of your house or condominium ”.
In case you are buying or selling, do not hesitate to contact Briceño through his website https://www.luisbriceno.com/
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