Owning a home is everyone’s dream. But many of us dread having a 30-year mortgage. Even more so if we are not getting a competitive interest rate which means our mortgage is going to be quite costly. The matter of fact is while most of us tend to focus on the rate of interest, we fail to realize that a 30-year mortgage is actually a big dent in our savings. This makes us wonder if there is a way we can make our mortgage cheaper if our financial situation becomes better over time. If you have an existing mortgage and wish to pay it off early, here are a few ways you can do so:
Make an Extra Payment
There are times when you may have some extra bit of cash left from your monthly budget. You can use this extra bit, even if it is $100-200 to pay an extra amount that month. Do this every month and you may be able to save a lot in terms of interest.
Bring Your Lunch
Bringing your own food to work can save you as much as almost $200 a month. Imagine the amount you spend on a single cup of Tim Hortons or a bagel each meal can be saved if you buy your groceries and cook food regularly at home. As a bonus, you can use this saved money to make an extra payment towards your mortgage.
Unless you want to be in debt for thirty more years, refinance your mortgage at a lower rate. Even if you have a low mortgage rate, you will still end up saving on the closing costs and pay your 30-year mortgage in 15 years and at a lower rate so you would save on the interest rate too.
Buying the Right Home
Typically, when you buy a home, you may want to think about parameters like financial readiness, whether you can afford to pay off that kind of mortgage, the down payment, is the monthly amount 25% or less of my monthly take-home pay, and many more concerns. Remember that this is an added expense to your monthly expenses which include your utility bills, fees, groceries, etc., and it will make sense to put a cap on them.
Maximum Down Payment
Remember that the more you pay upfront, the more you will save in the long run. Many experts recommend that, if possible, homeowners must try to buy their entire home in cash. Though it may sound weird, it will make sense in the long term as you will save on interest. If you cannot do 100%, starting at 10 or 20% is highly recommended.
If you are a first-time home buyer in Edmonton and are thinking about refinancing your mortgage or borrowing at competitive mortgage rates or are looking for debt consolidation, Mortgage Makers can help. Their team of the best mortgage brokers in Edmonton can help you to find the best options for all your mortgage needs.