Buying a home is one of life’s biggest milestones but the journey isn’t over once you get through the closing and get the keys to your dream home. You still must pay off the mortgage. Whether you have a 15-year or 30-year loan, wouldn’t it be nice to expedite the process?
One of the most compelling reasons to pay off your mortgage early is the fact that you can save a significant amount of money on interest payments. By accelerating your repayment schedule, you can reduce the total interest paid over the life of the loan, saving tens of thousands of dollars.
Ultimately, paying your mortgage off sooner also helps you build equity faster. Doing that frees up valuable financial resources that you can redirect toward other priorities, like your retirement savings, a child’s college education, or travel and leisure activities. You can even use your equity for home improvements, debt consolidation, or a downpayment on a vacation property.
And, of course, there are the intangible benefits of being mortgage-free. Owning your home outright, instead of sharing it with the bank, can give you a huge psychological boost and a sense of security and personal freedom.
So, where do you start if you want to pay your mortgage down ahead of schedule? You probably don’t need anybody to tell you that the key to the whole thing is making extra payments on the loan balance. The only trick is finding the money in your budget, right? Here are some tips that can help you pay the mortgage down faster.
Look for Ways to Reduce Your Discretionary Expenses
This is always the first step to take when you need to pull a little extra cash together for something else. Every dollar you save on your discretionary expenses is another dollar you can put toward your mortgage. With that in mind, here are some small changes that can add up to big savings:
- Bring Your Own Coffee to Work: Instead of buying coffee from cafes, brew your own at home and take it with you to work in a reusable mug.
- Pack Your Lunch: Restaurant meals really add up, even if it is just a sandwich and a drink. Start meal-prepping on the weekend and save your dollars.
- Cancel Unused Subscriptions: Review your subscription services and cancel those you don’t regularly use. The odds are high that you don’t really need Hulu, Amazon Prime, and Netflix all at once, and you can always sign up for a month if there’s something you want to see.
- Borrow Instead of Buying: Instead of buying digital books to load up your Kindle, get yourself and the kid's library cards so you can borrow books, movies, and magazines instead of buying them outright.
- Plan Inexpensive Outings: Look for free or low-cost activities in your area, such as hiking, picnics, or discounted days at museums so that you can enjoy family time without emptying your wallet.
- Shop Secondhand: Shopping at thrift stores is better for the environment and your bank account, so consider buying clothing, furniture, glassware, and more from thrift stores, garage sales, or online marketplaces.
- Limit Dining Out: You don’t have to stop dining out entirely if you really enjoy it, but you can cut back. Limit your dinners out to a couple of times a month and skip the alcohol when you’re there. The savings can be significant.
- Let Your Online Shopping Cart Sit: The internet can make it perilously easy to overspend, so get in the habit of putting “must-have” items in your online shopping cart and letting it sit overnight. If you still feel like something is worth the expense the next day, then you can proceed with the purchase. Also, that’s also a good way for retailers to tempt you to complete the purchase by offering incentives like 10% off, free shipping, or even buy one, get one free (BOGOs).
When you see the dollars start to accumulate, it can make all the penny-pinching feel worth the effort.
Investigate How to Minimize Your Non-Discretionary Bills
There are some bills you just can’t cut out, no matter how hard you try but you may be able to find ways to lower them a little. All these tips can help keep more money in your pocket, and that money can be used to make extra mortgage payments:
- Look for Cheaper Alternatives: You may have the option of several different providers for your electric, gas, and trash removal services. Call around and see if you can find cheaper sources for these basics.
- Shop for New Car Insurance: If you’re a good driver without tickets or accidents, you may be overpaying for your car insurance. Getcompetitive quotes to see if you can lower your costs there.
- Use Discount Stores: Dollar stores, discount grocery chains like Aldi’s, and big box stores that sell in bulk can all help you stretch your budget. Buy store-brand items or generics instead of name-brand groceries whenever possible.
- Try to Lower Your Interest Rates: If you have a balance on your credit cards, look at those interest rates. If you’ve always made your payments on time, call and ask the credit card company if they’re willing to lower your rates. If not, look around for a better card and take advantage of any interest-free transfer periods.
- Do Your Own Repairs: There are a lot of home repairs you can probably handle on your own with a little help from Google and YouTube. Try your hand at small jobs instead of hiring someone and save the money.
Make sure that you keep track of the savings you gain in these areas so that you know how much extra you can throw on your mortgage at the end of each month.
Put Bonuses, Side-Gig Money, and Gifts Directly on Your Mortgage
Finally, if you get periodic bonuses, have a side gig you can start, or get cash gifts with any regularity from your loved ones for your birthday or Christmas, don’t add that money into your budget. Consider it “extra” income that you can then route directly toward your home loan.
Remember that even making one extra mortgage payment per year can shave four or five years off your mortgage over time and that’s thousands of dollars in interest. Can you imagine what you can save if you can make even two or three extra payments in a year?
