Even homeowners who do all their homework before buying are occasionally surprised by how quickly the many expenses of home ownership add up each and every month. But rest assured; if you stick to your budget and make a few sacrifices here and there, it is possible to save money and maybe even pay off your mortgage a few years early!
Mortgages are compounded with hundreds of payments to slowly reduce both your principle loan as well as interest charges, so you can expect interest-heavy payments for the first five to seven years as your bank makes lending you all that money worth their while. But there are ways to pay down your mortgage faster and save money in the long run!
Bi-weekly is best - Opting for an accelerated biweekly payment schedule will not only allow you to make 26 payments a year, it will also reduce both your interest rates and principle amount faster. Lenders may charge you an additional fee, but this is money well spent.
Round it up – Did you know that a hypothetical increased payment of $1,000 instead of $830 could save up to $48,000 over the course of the mortgage? That's nearly eight years of payments! Ask your lender if this is an option for you.
Make a lump payment – If you get an annual bonus or consistently receive a substantial income tax return, consider using the windfall as a lump payment at the time of your mortgage renewal or sooner if your lender allows it.
When it comes to saving money, it's common to have difficulty during your first few years of homeownership as you adjust to the added expenses. But it can be done. Here are a few simple ideas to help you cut back:
- Online grocery shopping. How many times do you walk into a grocery store with nine or ten items on your list and leave with a cart full? Instead, do your shopping online and simply drive to the store to pick up your order – no more impulse buying! Check your local retailers to see if the service is offered.
- Make your own lunch and coffee every day.
- Use public transportation if available
- Install a programmable thermostat to save on energy bills
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