There is no harm in being very proud of your new house that you recently purchased with the help of a mortgage loan. However, be wise in repaying the debt or else you will mess up your finances and credit scores. Here, we give you five tips that will ensure a smooth loan repayment.
Pay the interest early on: These loans come with heavy interest in the initial months. So, keep big amounts to pay off these interests. Steer clear of the interest so that you can peacefully pay the principal amount in the coming months.
Monthly payments: Make a habit of paying a little more than the instalment sum money every month. A few hundred dollars extra on the instalment sum every month will save you from the interest in the long run and also reduces the loan’s repayment period. Also, open a savings account to put in some cushion amount which will help you pay the installments in the months where your expenditure becomes very high.
Re-financing: If you are earning much more than what you were at the time you took the loan and if you own more than 20% of your home, re-financing to a shorter loan would be a good option. Through this, you can reduce the loan period by up to half of what it was initially. Generally, a fifteen year mortgage is suitable for most of the people.