How To Repay Your Mortgage Quicker

Is it possible to pay off your mortgage within 5-7 years?

In this post, we are going to tell you exactly that, that too, without paying the double amount to the bank or without making any changes to your current earnings or even without refinancing. Home Equity Line of Credit (HELOC) is the strategy you can use to accelerate your mortgage repayment and become debt free fast.

How a Normal Mortgage Repayment Works

For example, if you borrow 2.5 hundred thousand dollars to buy a house on 5% interest rate for 30 years, we will end up paying 5 hundred thousand dollars, 2.5 hundred thousand capital amount, and another 2.5 hundred thousand as interest. A normal mortgage is fixed ended, once you have paid your money you can’t take it back, while the HELOC is open-ended and gives your flexibility in using your money and saving in the process.

Why Refinancing can be expensive

Well, banks make money by selling their interest-based products and at the beginning of the life of a mortgage, they charge more interest or interest only, without repayment of the principal amount. This is the reason; banks want customers to refinance their debts so that they can charge more interest.

Maximize Your Repayment by using HELOC

Put all your money and saving in a HELOC to lower your interest rate. As HELOCs are secured by your home equity, they are cheaper than unsecured and personal loans. HELOCs provide financial flexibility as you only borrow money when you need it. The average daily balance of HELOC means, they are adjustable and cheaper loans.

TAX Returns On HELOC

Since HELOC is considered as a form of mortgage, there are also tax benefits. In addition, most lenders have a cap on interest rates. Therefore, if interest rates rise, the borrower is protected. The main advantage of HELOC is the reduction in the principal amount borrowed which results in lower interest repayments in the long run. Maximum income utilization is the goal of HELOC. By playing smartly with your finances, you are able to minimize the life term of your mortgage payment.