A home loan is a big financial responsibility. Not only do you have to pay back the money you borrowed, plus interest. But you also have to make sure you do it in a timely manner. Fortunately, there are a few things you can do to repay your home loan faster and get out from under that debt sooner. Read on for tips on how to make extra payments, refinance your loan, and more.
Top 4 Tips To Repay Your Home Loan Faster
1. Opt for higher value of down payment:
If you have the capacity to make a higher down payment on your home loan, opt for it. A higher down payment means that you will have to pay less interest on your loan, which in turn means that you can repay your loan faster.
2. Negotiate on the interest rate:
If you’re looking to repay your home loan faster, one tip is to try and negotiate a lower interest rate with your lender. A lower interest rate will mean that more of your monthly repayments go towards the principal of the loan, rather than just covering the interest. This can help you repay your loan faster and save you money in the long run.
Of course, it’s not always easy to negotiate a lower interest rate, but it’s worth trying. If you can demonstrate to your lender that you’re a good customer who always makes their repayments on time. Then they may be more open to negotiating a better deal for you. It’s also worth shopping around and comparing rates from different lenders before you decide who to go with.
3. Strive for a loan prepayment:
Making extra payments on your home loan can help you repay it faster. Start by finding out if your lender charges penalties for prepayment, which could outweigh the interest savings. Then, make a budget and plan to increase your regular payments by a set amount each month. You can also make lump-sum payments when you have additional funds available. Just be sure to let your lender know in advance so they don’t apply the payment to future months.
“Prepaying your home loan can be a great way to save money on interest and shorten the life of your loan. Here are a few tips to help you make the most of your prepayment:
- Make extra payments when you can. Even an extra $20 or $50 each month can make a big difference over the life of your loan.
- Put any windfalls towards your loan. If you get a bonus at work or a tax refund, put it towards your home loan instead of spending it.
- Make bi-weekly payments instead of monthly payments. This will help you pay down your loan faster and save on interest.
- Refinance to a shorter term loan. If you have equity in your home, you may be able to refinance to a shorter term loan and save on interest payments.”
4. Consider refinancing:
If you have built up equity in your home, you may be able to refinance to a loan with a shorter term. This will help you pay off your loan faster and save on interest payments. However, it’s important to consider the costs of refinancing, such as appraisal fees and closing costs, before you decide if it’s the right option for you.
Making extra payments or refinancing to a shorter term loan can help you repay your home loan faster and save on interest. Talk to your lender about different options and see what would work best for your situation.