Mortgage interest rates are historically low and have been for a while. Are you being smart and taking advantage of the opportunity? For most people your mortgage is the biggest financial commitment you have during your life and one you will usually have for a few decades.
Low interest rates are fantastic for being able to borrow money cheaply and make it easier to buy the home you want. However the catch is that you have a massive mortgage that needs to be repaid. The risk is how long will interest rates stay at these historically low levels. It’s probably likely that at some stage they will rise which will mean your loan repayments will increase which could have a significant effect on budget.
So in the meantime you want to take advantage of the current environment and pay off as much of your mortgage as you can. This will not only save you a lot of money in interest over the long term but will also mean you will be mortgage free faster. Here are some ways to help you make increase you mortgage payments:
- Review your budget or if you don’t have one, create one. This will help you get a better understanding of where you money is going.
- Think twice about putting anything on credit. You home is your biggest asset and you want to make sure that you can afford to keep it. In times of economic turmoil you preferably do not want to take on extra debt as you want to have as much cash available for rising mortgage repayments and other basic costs.
- Reduce your expenses. Look at your budget and look at ways to decrease your expenses and cut back on your spending.
- Increase your income. Can you work extra hours or get a part time job to ride you through the tough times.
- Go through your cupboard and garage and work out what you don’t use any more and put them up for sale. Then put the proceeds on your mortgage.
Be mindful that you need to be actually able to put the funds into your mortgage. If you have a revolving credit, floating mortgage or flexi facility then it’s easy as they allow you to make extra payments. If you have a fixed mortgage you need to check what the conditions are on making additional payments. Many banks do allow you to increase the amount of your regular payments.
Every dollar adds up so no matter how little your extra funds are still make the additional payments. Do not be put off because you can’t make large payments. If you want some motivation, have a play with a mortgage calculator and see how much money and time those extra payments will save, you will be amazed!