Though no money can be cheaper than your own money, but sometimes Jupiter home buyers have to get a mortgage in case it is not possible to have all the funds required for a high value purchase of a property. Once a mortgage on a property is taken, it helps if you repay the loan faster. This will reduce the interest payment and will get you ownership of the house faster. The question is How to accelerate the mortgage payment?.
Let us see some methods which can help you with this.
One good way to clear your mortgage faster is to round off the EMI to the nearest hundred. Say if your EMI is $550, pay $600 instead. The round numbers are very easy to remember and at the same time it will enable you to payoff the mortgage faster.
Will it make any real difference ?
The rounding off of the monthly payment may not make a big difference in your day to day expenses, but over the period of the loan the small extra payment every month will substantially reduce your interest payment as well as the repayment period. An extra payment of $50 in the example accumulates to $600 per year, which is equal to one extra instalment every year. This will be deducted straight from the principal thereby have more profound impact in reduction of interest than the normal monthly EMIs.
The difference in expenditure due to rounding off will not be a big burden on your monthly budget, rather in your mental calculation, you may already be accounting the mortgage payment to the nearest 100 already.
Over the total life of a 15 year mortgage, this extra installment every year will substantially reduce the repayment period by as many years as the mortgage is for. This money can very well be allocated and put to better use for other household expenses.
Some other ways to make the extra payment are to give a prepayment in a lump sum, or instead of the monthly payment you may opt for fortnightly payments. These will also have the same effect...