If you want to pay off your home loan as soon as possible, this is not a bad idea. You can put more money toward the loan, but there are some things you need to know.
Depending on how much money you put toward your home loan every month, you could shorten it from months to years. You would also pay less interest on the principal because you would be systematically paying it down.
Interest or Money Due?
But with some home loans, you pay the interest first and then the principal. If you put more money toward the loan, you would just be giving the lender an advance, which would be pointless.
Prepayment penalties
Some loans also have fees if you pay them off early.
Since the lending company makes money from interest, they want to make sure you don't pay off the loan early and cut into their profits. To do this, they charge a percentage of the amount you still owe.
If this is the case, you should think about whether it would be better for you to pay off your home loan faster.
Maybe it would be better to just stick to the plan for making payments.
Putting money into equity and paying down debt
If you've read the fine print and found that there are no penalties for paying off the loan early and that the interest rate and principal are equal, you can put more money toward paying off the loan faster and get lower interest rates and a shorter loan term.
And as you pay off your debt, you'll build equity in your home. This will let you get extra money from your home to fix things, go on vacation, buy a car, or do anything else.
Other choices include Financial Advice and Refinancing.
If you're not sure what to do, don't be afraid to talk to a financial advisor. There are also many online sites that can help you with mortgages and mortgage refinancing.
You can always get in touch with them if your current lender won't help you out.
You can always refinance your home to get better terms if the market has changed since you got your loan or if your income and finances have gotten better.
