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13 Ways to Pay Off Your Mortgage Years Sooner
Important Note: First make sure you know how much extra you can put down on it a year and what the rules are around that. You don’t want to put extra down and find out that you now have to pay a penalty.
1) Get Your Partner & Family on Board
The first thing you need to is to get your partner and your family on board (if you have a partner or a family). Paying down extra on your mortgage is a big goal and in order to achieve it, you have to talk openly about it, so it is a joint effort. Two you have two people in a relationship, both people are making financial decisions and financial transactions and you will want them to align with your bigger goal of paying off your mortgage sooner. You can have a fantastic plan to do this and all of the strategies in the world, but if you don’t have both people on the same page, the following through with the plan and the implementation of it won’t align with actually having extra to dedicate to paying off your home sooner.
2) Master Your Cash Flow
This is definitely one of the most important things to do before committing to putting extra towards your mortgage. When you have clarity with your money and you become really competent at mastering your cash flow (not just “budgeting”), you truly know how much extra you can put towards your mortgage without causing you to come up short in other areas. It will also help you to see your months that you may have higher income available to put towards your mortgage, so you can allocate it for it before it comes and all of a sudden is put towards something else. Feeling confident with cashflow management and taking control of your finances months in advance, is one of the skills that I help my financial coaching clients to achieve.
By making mastering cash flow a priority, one of my clients “D” (to protect her identity), we were able to make sure that all of their goals were being achieved including paying into hers and her husbands retirement funds AND we were able to make it so they could put $50,000 additionally towards paying off their mortgage each year for the remaining term.
3) Pay Off Credit Card & Consumer Debt First
Focus on paying off any credit card debt or consumer debt that you may have, before putting extra down on your mortgage. When you have consumer debt, you are paying very high interest and you will want to pay this off first. Then you can “roll over” the money that you were paying towards these debts, to use as extra to pay down more on your home.
4) Change from Monthly Payments to Bi-Weekly or Weekly Payments
This is such a fantastic way to pay your home off sooner just switching the frequency of how often you pay your mortgage payments. When you are making monthly payments, you make 12 payments a year. But when you are making bi-weekly payments, you are making 26 payments a year (which is actually 2 extra payments you will be making a year). Just make sure that you know when these two extra payments fall, so you are prepared to pay those “additional” payments. If you switch to making weekly payments (these payments would be smaller than what you are paying monthly or bi-weekly), you are paying off your mortgage even quicker. Just following this one tip alone, you can shave years off your mortgage! Just make sure you speak with your mortgage lender to make sure you understand the specifics of your mortgage and what you can and can’t do.
5) Make Extra Principal Payments Monthly
You can find out how much extra you can pay monthly towards your mortgage and pay extra towards it. Make sure that you tell them you want these extra payments applied towards your principle amount.
6) Increase Your Payment Amount, Even Just an Extra $50 or $100
You can choose to increase the actual amount that you are paying towards your mortgage every month, but I would do this with caution. The reason I say this is because you want to make sure that you are in a financial position with enough disposable income, that it isn’t a struggle to contribute this extra every single month. The reason I say this is because some of the other strategies such as the one above, you can do whenever you feel like you have “extra” to do it, but you are doing it when you choose, versus this strategy you are now committing to an extra amount every single month.
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7) Put your Tax Refund Towards It
If you or your partner receive a tax refund, you can use this money to put as extra towards your mortgage.
8) If You Get a Raise or a Bonus, Allocate That Money Towards Your Mortgage Right Away
Anytime that you receive a raise, immediately set it up so you don’t have that “extra” money going into your account, but instead to another savings account to use that money to put towards your mortgage. The reason I say to do this as soon as it happens, is because you don’t want to get used to having this “new” amount of money, because it is so easy for your lifestyle to increase, which I see happen all of the time.
9) Increase Your Income
I love when people are also willing to increase their income, not just “reduce expenses.” I think it is a beautiful combination when you use both methods, to put extra money towards paying off your mortgage early.
There are many options you can use to increase your income:
Work extra hours, pick up overtime
Start a side hustle
Work odd jobs
There are so many things you can do and one of my favorites for women to be able to do from home, I share in a whole blog post here.
10) Use Cash for Groceries & Eating Out & Put it Towards Your Mortgage as Extra
One of the fastest ways that every person can save money, is on their groceries and eating out. As an online financial coach, I consistently see from all of my clients that this is an area that can be tightened up. I have a blog post I wrote about ways to save hundreds on groceries every month, that you can check out here.
But the number one to tighten up your grocery and eating out costs really quickly is to use cash! When you use cash it makes money more tangible again and as you see the cash going down in your wallet, you tighten your spending on groceries and eating out. I use this strategy with myself and my financial coaching clients and it works SO well to save money!
11) Cut Cable & Switch to Netflix
You can easily save $50+ a month just from cutting your cable cost and switching to Netflix! Then take what you were spending on cable and direct that as extra towards your mortgage, every little bit helps! If you saved $100/month on cable, that’s $1200 extra towards your mortgage a year which equals $12,000 you’ve saved in 10 years! Little expenses add up and they really do make a big difference in the end!
12) Have Your Mortgage Free Goal Where You Can See it Daily
Have your vision somewhere you can see often.
Post pictures up in your house
Have post-it notes
Have the date when you will have your mortgage paid off or aim to, somewhere you will see it
The goal of having your mortgage paid off early is a goal that you have to be very disciplined about and it usually isn’t a goal that you are able to achieve might away (in 90 days). Therefore having the vision somewhere you will visually see it daily, will subconsciously affect your habits, decisions and actions in a positive way to align with what you want most. This will help you to stay the course on the days that are difficult and the days that you really don’t want to stay on track for achieving your goal.
13) Monitor Your Credit Score
This is something that is important to do, but I don’t hear enough people talking about it. The reason it is important to do this in regards to getting your mortgage paid off sooner, is because you want to make sure you don’t have any fraudulent charges or errors reported on your credit report because this will affect the interest rate that you will be paying on your mortgage (if you have a mortgage interest rate that is variable or for when your mortgage comes up for renewal). If there is fraudulent activity on your credit report or a reporting error, it can lower your score and therefore increase your interest. Even a small increase in your interest rate can have you paying tens of thousands of dollars more in interest, that you shouldn’t be paying! That is why I recommend for you to check and monitor your own credit score.
Now I know you might be worried about dropping it by checking it. That is only true when someone else is pulling your credit score, not when you are checking it yourself. I find out my credit score once a month and I have a very high credit score. For Canadians, I recommend that you use Borrowell to check your credit score, that is personally who I use and who I recommend for my clients to use as well.
If you are American, I recommend Credit Karma.
I hope you enjoyed these tips for paying off your mortgage sooner!
I would love to hear which ones you enjoyed the most, comment below!
I am very active on Instagram, follow me here for more financial tips & tricks: http://instagram.com/mandyythomas (@mandyythomas)
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