Even if you get a great deal on your property purchase, there are many reasons to make it pay off as soon as possible. First, the more property you have, the more you can make if you decide to sell it later. You will also have more money for investments and property improvements if you can pay off your property quicker.
Not everyone has the money to pay off their entire home loan or land at once. With a few smart steps you can get on the right track to a faster pay-off and more money for other spending goals.
Are you interested in accelerating your payments? Here are four ways you can pay off your property faster and more efficiently.
Each Quarter, make an additional payment
Look at your financial goals and budget to determine if you have the money available for an additional quarterly payment on your property. Many lenders will allow this extra payment to go directly towards your principal. This could lead to more equity and lower interest year after year.
Choose shorter terms
It might be worthwhile to switch to a 15 year mortgage if you have financed your property with a traditional 30-year mortgage. This will allow you to increase your monthly payments and make long-term savings. You’ll not only pay your property off faster, but you will also save tens to thousands of dollars in interest over your loan term.
Round up Monthly Payments
A little extra cash each month can make a big difference in your investment. If you have the funds, round up your monthly payments to take a larger chunk of what is owed. Even a $50 to $100 extra per month can add up and could be used for principal payments.
Look Into Mortgage Recasting
You might consider mortgage recasting if you have recently received a large bonus or other financial windfall. This is where you pay a large amount towards your mortgage and your lender will recalculate your monthly payments based on the new amount owed. This is an alternative to standard mortgage refinancing. There are no fees involved and it can be a smart way of re-amortizing your balance for a faster payout and reducing the amount that you owe.
While paying off a property quicker can be a good idea, it is not the right thing for everyone. If you have to keep more cash on hand for investments or emergencies, or if the property’s value is likely to drop in the future, you might be better off sticking with your current payment plan. Talk to a financial advisor if you are unsure. They can help you determine your best option based on your short- and longer-term goals. And, don’t forget that you can always adjust the payout strategy if necessary.