Being the owner of your home is, without fear of contradiction, rewarding. However, it does come with a good range of responsibilities. It’s inevitable. In most scenarios, the primary responsibility is linked to a mortgage of about 30 years, with regular repayments. How about the stories about people who manage to repay their mortgage in record time? Is that even possible? In case you were wondering, here are some useful tips to obtaining mortgage freedom.
Tips to Mortgage Freedom
Avoid making true weekly repayments
For starters, you should steer clear of making true weekly repayments. That’s, mainly because there are lenders that calculate these sums as they multiply the amount of monthly repayment, and afterward, they divide it by 52. Alternatively, it’s important to ask the lender to divide the amount of monthly repayment by four. As some months encompass almost five weeks, this calculation concept will add up the equivalent of a month’s repayment, in the course of an entire year. In other words, instead of 12 months of repayment, you’ll be paying for 13. As surprising as it may seem, such a payment option will diminish a significant amount of money of the interest sum.
Embrace healthy financial habits
The next tip to obtaining mortgage freedom is quintessential. Adopting healthy habits from the very start is of great importance. When possible, strive to make extra repayments. If you take a disciplined approach, you’re off to a great start, because it’s the first years of mortgage that are most difficult. By making additional repayments, you’ll diminish the life of the loan, and it will make the world of a difference in the long run.
Consider a split loan
What is a split loan? It’s a loan option that combines fixed and variable rates. The variable alternative provides the borrower with the possibility to make additional repayments without having to pay penalties. Meanwhile, the fixed option enables one to budget his/her finances, as the repayments are fixed. That’s why, on the road to relishing mortgage freedom sooner than later, this loan option is a good compromise.
Open an offset account
An offset account is a separate account, which is connected to your mortgage. It functions as a run-of-the-mill account, enabling the user access to the funds. The difference is that the interest credit balance on the offset account is charged on the home loan. It’s a recommendable option particularly for investors who are eager to decrease the interest they have to pay, without altering the deductibility tax advantages of their investment debt.
One last word to obtaining mortgage freedom. By all means, for best results, it’s recommendable to ask the guidance of a professional financial advisor, on the quest towards enjoying mortgage freedom sooner than expected.