If you have a mortgage on your property, consider paying it faster, especially in the first years.
Because in a typical 30 year mortgage, your bank (who loaned you the money to purchase your property) is making a mountain of money off the completely unreasonable interest they charge you, even when your interest rate is considered low, like 3 to 4%.
The capital isn’t being paid back fast, at first.
For instance, if you pay 1,500$ per month on your mortgage, you’re likely going to pay down the capital of your mortgage at a rate of roughly 100$ a month. The rest, the huge bulk of your payment, going straight into the bank’s pockets as interests.
Yep! You’re working like crazy to make your bank insanely rich.
Let that sink in.
Okay, let’s continue…
So obviously, you’ll want to clear the capital of your mortgage as quickly as you can. Interests make the bank rich but they keep you poor.
For instance, if you pay 2,000$ a month instead of the 1,500$ we just talked about, you’re likely going to put 100$ + 500$ on the principal of your mortgage. 600$ being way better than 100$ measly dollars could shave off 10 years from your 30 years mortgage. This should be all the motivation you need.
Expect your bank to advise against this strategy since they’ll be losing some 10 years of interest on your mortgage.
So think up your strategy by yourself.
Never trust your bank. They’re the ones who will lock or have already locked you into that insanely expensive mortgage, in the first place!
This accelerated mortgage payment strategy can also be enhanced by making your payments every two weeks instead of once a month. Better yet, make those payments once a week.
The more quickly you pay off your mortgage, the faster you clear out your debt. We’re talking years shaved off the total “service” of the mortgage debt. Again, don’t expect the bank to offer you this “option”.
Use any payment calculator you want to play with your own numbers, like this one which is free. There are many others but the message is always the same. If you’re stuck in interest repayment hell, find out how to pay down your mortgage as quickly as you can.
Mortgages are a basic numbers game.
And the bank made sure to stack all of the odds of a quick repayment against you.
Plan ahead for a smaller amount
Before getting a pricey mortgage, keep in mind you’ll typically have to reimburse 2,5 to 3 times that amount.
Interests are compounded and extremely costly, to you.
So a typical 200,00)$ mortgage could easily end up costing you around 600,000$, after 30 years.
Sure, at that point, in 30 years, you could sell that property for 600,000$ (because its value went up) but remember in this scenario, you’re raking in 0$ of profit.
That’s something to ponder before you get into an expensive mortgage.
Ideally, get as little a mortgage as you can. And if that’s in any way possible for you, take the shortest term you can.
- Hunt for foreclosures;
- Buy up a smaller property (be as reasonable as you can);
- Rent part of your property, if possible (like a parking space or a room).
Anything to either lower the mortgage or jack up you revenue to pay your mortgage more quickly.
And remember, your banker will never, like ever-ever-ever, provide you with ways to make him (or her) less “insane interest profit”. That’s your job and your job only. Never forget that.
In fact, just so you’re in the right mental state when you go the bank, consider your banker (or “loan officer”) to be your ennemy. Why? Because that’s exactly what he is.
For all uses and purposes, a banker is a loan shark with a suit.
Bankers are vicious money vampires and they suffocate our society by taking out economic fluidity and replacing it with their own flavor of devious interest-infested poisonnous mortgages… and other equally ruinous “financial services”.
That might seem a tad blunt againt bankers but rest assured they know (very well) what they are. And how much they pump out of your budget for decades in exchange for creating nothing.
So there you have it.
Bankers are basically your ennemy and society would be countlessly better off without them. Until that day comes, use your creative mind to fight off the ill-effects of your mortgage, in every way you can.
If it’s your mortgage, it’s also your opportunity to strategize to be on the winning side of the equation.