4 Ways to Pay Off Your Mortgage Early

Most people who buy a home take out a mortgage loan for an average of 25 to 30 years. Longer or shorter terms may be available, depending on the applicant’s financial factors. This average loan period represents approximately one-third of a person’s lifetime, which is a long time to make monthly payments on personal property. However, many loans are available without a prepayment penalty clause, which means that home mortgages can usually be paid off early if the buyer is able to do so. While the typical monthly house payment is often large enough to preclude additional payments for a regular household, there are ways to pay additional amounts on the mortgage to pay off the loan faster, potentially saving thousands of dollars in interest overall and freeing up the monthly budget from a sizable house payment that can then be spent on other things.

Make extra payments.

Paying just one or two extra house payments annually can take years off the total loan period and reduce interest paid by thousands of dollars. Check with the lender to ensure the additional payments are credited to the loan principal as extra payments, not late fees or other loan costs.

Apply windfalls.

Job bonuses, rebates, cash gifts, and tax refunds provide extra income to pay off mortgages sooner. There is no loan commitment to pay extra on a regular basis, so just apply whatever additional income becomes available to the loan’s principal balance to reduce the total remaining amount owed. This in turn will lower the amount of interest paid over the life of the loan.

Add small amounts.

You can make even small payments each month on the principal balance of the mortgage loan. Paying just $10 or $20 can make a dent in the mortgage balance over time. Larger amounts can make an even bigger impact. For example, when you pay off the car loan, apply that monthly amount to the mortgage balance each month for additional long-term savings.

Refinance the mortgage loan.

Mortgage rates are still low enough to make it worthwhile to consider refinancing your home loan. Replacing a 5 percent interest loan with one that is 3.5 percent for 15 years may keep the monthly payment at a similar level, but the interest rate will drop substantially, meaning that the house will be paid off more quickly.

You don’t need huge sums of money to pay down your mortgage ahead of schedule. Making occasional extra payments, adding windfalls, applying small monthly amounts, and refinancing your loan can save considerable interest and pay the home off sooner. Imagine your monthly budget without a house payment and the home’s value for emergency equity as incentives to get started. The Windsor Family Credit Union website is a useful reference for more information.

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Top Benefits of Debt Consolidation

If you are in a lot of debt, such as from credit cards or loans, you might be wondering if there is any way that you can get some debt relief. Luckily, you do have an option: debt consolidation. These are a few reasons why debt consolidation can be worth it.

Get Your Creditors Off Your Back

If you find yourself dealing with collections calls all the time, you probably know just how terribly stressful they can be. One great thing about debt consolidation is that you will be paying off all of your debts with a loan. Then, you won’t have to worry about all of your creditors calling and harassing you.

Pay Off Debts More Quickly

In many cases, people are able to negotiate their debts and actually pay less than what they owe. This can be a good way for you to focus on paying off your debts more quickly and without having to spend as much money.

Reduce Interest Rates and Fees

Depending on the credit cards and loans that you have, there is a good chance that you are paying out a lot of money in interest and fees. The good thing about debt consolidation is that the loans often have much lower interest rates than credit cards. This means that you can save a ton of money in interest and fees while you are paying off your debts.

Salvage Your Credit

If you are paying some or all of your debts late each month, there is a chance that your credit score is taking a big hit because of it. This can be a bad thing, since a low credit score can make it a lot harder for you to qualify for things like home and car loans. By paying off these debts now with a consolidation loan, you can actually salvage your credit score.

Pay Lower Monthly Payments

Right now, you might find that what you are paying in credit card bills is putting a huge damper on your budget and making things a lot more difficult for you to afford. If you take out a consolidation loan to consolidate your debts, however, you will often find that your monthly payment amount is a lot lower than what you were paying before. This can help with monthly budgeting and can give you a little bit of breathing room.

As you can see, if you are in a lot of debt, consolidating that debt can be a very smart option for debt relief. If you contact a company that specializes in helping people to consolidate their debts, you can find out more about debt management and how you can consolidate your debts. More information can be found on the Credit Counselling Services of Atlantic Canada website.

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Take a Forward-Thinking Approach When Applying for a Mortgage

Whether you are applying for a first or a second mortgage for refinancing or buying plans, you understandably want to make an informed decision that helps you to achieve your goals and that is right for your financial future. Unfortunately, when many people apply for a new mortgage, they only think about their immediate financial state. For example, you may ensure that you can afford the new mortgage payment based on your current budget. While this is an important step to take, you also need to think farther ahead to ensure that the mortgage terms are right for you.

How Long You Plan to Own the House
Many applicants work with mortgage brokers when applying for a Canadian mortgage, and this is a great way to find the best rate possible on your loan. However, while much emphasis is focused on the interest rate and the resulting monthly payment, less emphasis is placed on the term of the loan. The term of your loan will impact how quickly you can pay off the loan, how much interest is charged over the life of the loan and even how affordable it may be for you to sell the house in the future. For example, if you plan to retire in the house within 15 years, a 15-year mortgage may be ideal. If you plan to sell the house within five years, you may need to consider how much equity you will have in the home by then. Your term length will greatly affect equity appreciation.

How Quickly the Debt Will Be Repaid
When you choose a shorter term length, your payments will be higher. However, in exchange for the higher payments, the loan balance will be paid off more quickly. Equity will accrue faster, and less interest will be paid over the life of the loan. This can affect your ability to sell the home for a profit in the near future, the date you are able to retire without a mortgage payment and more. Your mortgage broker can assist you in exploring this in greater detail.

How Your Budget May Change in the Future
Another factor to consider is fluctuations in your budget. Most people have minor budget adjustments throughout the year, but there may be major life events that can dramatically affect your budget. For example, you may plan to start a new business soon, to have a baby or to send a child to college. Remember that your budget will be affected by your mortgage payment for the life of the loan, and this may span across decades.

The best mortgage is one that is affordable for your budget now and that helps you to achieve goals you have for the future. Explore each of these points carefully before you apply for mortgage financing to ensure that you are making the right financial decision. The Canadian Mortgage Services website is a good reference if you want to find more information online.

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How to Improve Your Financial Future Without Filing Bankruptcy

Filing bankruptcy can be messy, expensive and embarrassing. No one enjoys having to explain in court why they feel unable to pay back creditors. A great alternative solution allowed by bankruptcy law is a consumer proposal.

What Is a Consumer Proposal?

A consumer proposal is an offer of agreement to pay creditors a portion of what is owed, with the benefit of having them forgive the remaining balance. It is a legal agreement when both parties sign to the terms of the repayment obligation. It is a preferred way to resolve long-standing debt issues for both sides. The creditor will not have to take a complete loss and the individual in debt can improve the future financial outlook.

A Workable Alternative to Filing Bankruptcy

The Bankruptcy and Insolvency Act allows for an option that is an alternative to bankruptcy case filings in court. The overseer of the entire process is a bankruptcy trustee. They are knowledgeable about all of the laws and how to get you the most affordable agreements possible. The creditors are in no way obligated to agree to your proposal, but many will to avoid having to write the debt off completely.

Improving Your Credit Rating

Loans and lines of credit have to handled with care to avoid negative marks on your credit rating. Slow payment and a history of non-payment put hard hits on your credit score. Offering a proposal and sticking with it is one way to start improving your credit score fairly quickly. One of the most important things to remember is to pay the agreed upon amount as it is due, or early. Keep up with all of your other debt obligations and the score will begin to move up.

Developing Responsible Credit Habits

Changing the bad debt management habits that landed you in a tough position are an essential part of the overall debt relief process. Limiting the number of credit applications, reducing the amount owed on each card and paying at least the minimum amounts each month will keep high interest from skyrocketing your debt totals.

Lifting the Burdens of Overwhelming Debt

The feeling of freedom from overwhelming amounts of debt can be uplifting and encouraging. Nearly everyone has made a share of bad credit and debt management decisions. There are ways to avoid the hassles and scourge of bankruptcy and get debt-free. There is a little paperwork involved,negotiating for the best terms on both sides, but ultimately both end up walking away a winner.

Contact bankruptcy specialists to find out about this effective alternative to bankruptcy today!

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