Tuesday, 19 December 2017

Doing Away with Debt

from here

We know that owning a home and taking on a mortgage is a long-term commitment but there are simple ways you can reduce your debt and even knock a few years off your
payments. 
 

Homemade Makes All The Difference

Pick yourself up a brand new shiny lunch box and make use of it! Swap eating at the work’s canteen or even popping out for shop bought sandwich for bringing in homemade lunch is not only ultimately more satisfying and tasty, but it can also knock up to three years off your current mortgage! Applying your average lunch money savings of 100 Euros a month to your mortgage could help you save more than 28,000 Euros in interest.

Alternatively look at other small day-to-day sacrifices you could make as saving as little as 20 Euros worth a month and adding it instead to your regular mortgage payments, you could pay it off a year in advance and save thousands in the process.  
For example, your daily coffee from Starbucks, which on average sets you back 3 euros a day could be put to better use. Not only would you feel better by reducing your caffeine intake but your mortgage could feel a little healthier too as the extra 90 euros a month paid into your long-term investment could result in a four-year reduction and over 20000 euros in interest payments.

Switch It Up

You could refinance a long-term mortgage into a 15-year loan. If the interest rate on your mortgage is already competitive, look at making payments on your 30-year mortgage as if it was one held for 15-years to avoid a hefty amount of interest payments. You can apply the same logic to a 15-year lease and if you can afford to, take control and increase your fees to pay it off in 10 years?

Size Matters

Home downsizing could be considered a drastic step, but if you’re set on getting rid of your mortgage, you could contemplate selling your larger home, using the profits to buy a smaller, less expensive house. You may be able to pay cash for your new home entirely, but even if you have to get a lower mortgage, you’ve succeeded in reducing your overall debt. Then your goal will be to get rid of that smaller debt as quickly as possible. The smaller the balance, the quicker you can obliterate it.

Plan Ahead

By planning before you take out a mortgage, you may be able to create a much smaller debt footprint.

Up Your Down Payment

Paying cash for a house may sound unrealistic, but it is achievable. That may well be just too big an ask to wait until you can purchase your home outright, but plan to put at least 10% down at the time of taking out your mortgage. In the same vein, 20% is, of course, even better. The more cash you can afford to part with at the beginning will result in less money you’ll need to borrow. This means a lower monthly mortgage payment which will ultimately make it much easier to pay off your mortgage early as your finances are likely to increase the older and more settled you become.
Love,
Ieva

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