Most of us dream of the day when we will own our home. Most of us will start with a mortgage and hope to pay it off before we retire. Anything more than that is just a bonus. What if, with just one simple change you could take 30 year mortgage? In this article I'm going to suggest two things that you can to pay off your mortgage sooner, I hope that at least one of these suggestions you will use.
So here is the first suggestion, nice and simple, most people are still paying monthly repayments on their mortgages. By switching to fortnightly mortgage repayments you will pay an extra monthly mortgage repayment each year. Now I know that doesn't sound like much so here are the figures. The average Sydney mortgage is around $400,000 so that is what I'm using for my calculations here. If you have a $400,000 mortgage, at 7% interest per annum, taken over 30 years your repayments would be around $2,600 per month. So by paying $1,300 per fortnight you would save around 6 and half years on your mortgage and around $140,000 in interest.
To exemplify the difference between a 30-year fixed mortgage and a sub-prime mortgage, let's look at the following equation. On a 30-year fixed, $100k loan with 7% interest, your monthly payment including interest and principle would be $665. However, over the next 30 years, you will have paid $139,511 in interest alone. Essentially paying more than double the amount you originally purchased the home for. On the flip side, let's look at a 15-year loan - for the same amount you will pay $871 a month and $56,799 in interest over the term of the loan. So although you are paying more monthly with a 15-year mortgage, you would save about $82,700.
A 30-year fixed also allows you room to explore other avenues to save. Since payments are lower with a 30-year mortgage, you can invest in a long-term fund that will pay out more than what you would save with a short-term loan. Loan terms are also determined by what you want to do with the property. If you are an investor, or if you are looking to accrue equity fast, you probably would not want to go with a 30-year loan - 30-year loans take much longer to build equity. What are your financial goals? 30-year loans are definitely attractive, but is it the best option for you? Ania Tates, Co-founder of Favored Enterprises, LLC
Favored Enterprises, LLC offering real estate investing that works in YOUR favor. We are a group of real estate investors who buy houses from people just like you. We are not Realtors or associated with any real estate agency. You'll get a fair price for your property. You'll sell in days for CASH or terms. There are no fees and no commissions since we are not Realtors. We are able to work with all types of mortgages. You will get a simple, no hassle closing with no cost to you.
So here is the first suggestion, nice and simple, most people are still paying monthly repayments on their mortgages. By switching to fortnightly mortgage repayments you will pay an extra monthly mortgage repayment each year. Now I know that doesn't sound like much so here are the figures. The average Sydney mortgage is around $400,000 so that is what I'm using for my calculations here. If you have a $400,000 mortgage, at 7% interest per annum, taken over 30 years your repayments would be around $2,600 per month. So by paying $1,300 per fortnight you would save around 6 and half years on your mortgage and around $140,000 in interest.
To exemplify the difference between a 30-year fixed mortgage and a sub-prime mortgage, let's look at the following equation. On a 30-year fixed, $100k loan with 7% interest, your monthly payment including interest and principle would be $665. However, over the next 30 years, you will have paid $139,511 in interest alone. Essentially paying more than double the amount you originally purchased the home for. On the flip side, let's look at a 15-year loan - for the same amount you will pay $871 a month and $56,799 in interest over the term of the loan. So although you are paying more monthly with a 15-year mortgage, you would save about $82,700.
A 30-year fixed also allows you room to explore other avenues to save. Since payments are lower with a 30-year mortgage, you can invest in a long-term fund that will pay out more than what you would save with a short-term loan. Loan terms are also determined by what you want to do with the property. If you are an investor, or if you are looking to accrue equity fast, you probably would not want to go with a 30-year loan - 30-year loans take much longer to build equity. What are your financial goals? 30-year loans are definitely attractive, but is it the best option for you? Ania Tates, Co-founder of Favored Enterprises, LLC
Favored Enterprises, LLC offering real estate investing that works in YOUR favor. We are a group of real estate investors who buy houses from people just like you. We are not Realtors or associated with any real estate agency. You'll get a fair price for your property. You'll sell in days for CASH or terms. There are no fees and no commissions since we are not Realtors. We are able to work with all types of mortgages. You will get a simple, no hassle closing with no cost to you.
No comments:
Post a Comment