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YES Buisness Center
912,
Al Barsha 1,
Behind Mall of the Emirates
P.O.Box : 125341

Office Tel : +971 4 4204033
Office Fax : +971 4 4204034

ORN : 11842
Email : info@rehvach.com

Tips to pay off a mortgage faster

Smart mortgage tips that really work

There are lot of advertising that claims to help you pay off your mortgage faster, it most likely comes as no surprise to hear that you only have four ways to reduce the cost of your home loan and time frame.
  1. Get a cheaper interest rate 
  2. Make more frequent repayments
  3. Repayments that is larger than the obligatory amount
  4. Paying for no more than the home loan features that you need

Get a cheaper interest rate

The biggest single opportunity to reduce your mortgage is to find a cheap interest rate from the commencement of the loan period. Probe around with both major banks and other secure lenders such as credit unions and building societies. The benefits of a cheap interest rate may be nullified if you are saddled with soaring fees and a rigid product. So do your homework and find out which mortgage product offers a cheap interest rate with lower fees and a combination of home loan features that you need – your mortgage broker can help you with this.

Get a loan with a flexible payment structure

Make sure your mortgage allows you to make your regular payments plus any ad hoc repayments without penalty. Choose your features wisely or they will cost extra.

Make extra payments as early as possible

People don’t realise that the bulk of the payments made at the start of a home loan actually go towards paying off interest and not reducing the principal of your mortgage.

Therefore any extra payments that you make from the very beginning, go towards reducing the principal on your and minimising interest payments down the track.

Make more frequent repayments

As the interest is calculated on a daily basis, making payments on a more frequent basis whether fortnightly or weekly serves to slice down on the interest payments on your mortgage.

Paying income directly into your home loan

As interest is calculated daily, the interest can be further reduced by getting your salary credited directly to your home loan account which effectively reduces the principal you owe from the moment your salary is in the account.

Don’t lower repayments if interest rates drop

The minimum mortgage repayments will usually fall if interest rates drop, in such cases rather than reducing your payments at this stage you should maintain your previous payment levels.

This particular method has a further benefit as you will hardly notice the difference since you would already be used to making payments in that amount.

Match your fixed rate to your intended period of stay

It makes sense to match your fixed home loan rate to the time you intend to live in a property and you can sell it after this specific timeframe. So if you intend to keep a property for five years, avoid getting a 10 year fixed interest rate.

Keep in touch with your mortgage broker

As there may be numerous changes in the home loan market and to your individual financial situation over the course of your home loan, it is wise to stay up to date and seek advice from your mortgage broker frequently.

Remember, some of these changes may be opportunities to own your home sooner!