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Repay Your Mortgage Early

Mortgages are probably the biggest debt you will ever have in your life. Many mortgage periods are as long 30 years and for some people this is just too long - they want to finish paying their mortgage early and save on the interest of their home loan.

How can you start repaying your mortgage early?

One of the ways you can pay off your home loan earlier than the period you originally planned for it is by refinancing your loan to a shorter period. This will significantly cut down on the interest paid and will save tens of thousands of dollars for you. Of course, this will man higher monthly mortgage payments.

For those who don't plan to refinance, there are some easy ways to pay off your mortgage early. Before doing anything, ask your lending company if they allow prepayments on the principal of your loan without penalty. You wouldn't want to pay extra each month just to get penalized for it. Make very sure that your extra payments are being made towards the principal of your loan and not as an advance towards the next month's mortgage payments.

For starters, repaying your home loan early can be as easy as putting in an extra $100 in your monthly check. Consider overpaying a fixed percentage of your monthly mortgage payments for income tax refund advance. For example, paying an extra 10% each month means 1.2 extra monthly payments each year. This can painlessly shave years off your mortgage period.

Once a year, you might want to make a larger prepayment to take advantage of your yearly bonus or other windfalls such as tax refunds.

Even if you do not regularly prepay your mortgage, you can still make irregular lump sum payments when you receive unexpected financial windfalls like an inheritance or winning at a casino in Las Vegas.

However, if the principal oan your home loan is reduced, the mortgage interest available to deduct on your federal tax return is also reduced. This may have unexpected effects on your taxes but in the long run the savings made from not paying more interest is still more beneficial than higher tax deductions.

Some people may prefer to save their money rather than pay off their mortgage early. This is also a good strategy if they are able to find a savings plan that has a higher interest rate than their home loan.

Apart from saving a lot on the interest, one of the main advantages of paying off your mortgage early is that it frees your mind from the worries of monthly home loan payments. Instead of writing a mortgage check each month, you can think of saving money for your dream vacation, retirement, children's college fund and other such things.

If you are thinking about buying a home, taking out a mortgage or even just checking the health of your current mortgage, then you might want to compare home loans at the free informational site http://www.yourmortgage.com.au