How To Pay Off Ur Mortgage

Here are some tips I got from Azizi Ali's book on "How to pay off ur house loan in 5 years or less" (2007).

1) Pay the loan as soon as u get the money - There is usually a period of 1 month b4 the 1st payment becomes due after the loan is disbursed by the bank. If we wait until the due date before making the payment, then the interest for that month will be the highest ever interest charge. Also, the payment doesn't have to be the exact figure stated as the payment becuse the more u pay, the lower will be the interest charge.

2) Pay a little bit extra every month - Even a small amount will go a long way to reduce the interest charge and therefore the total payment in the end.

3) Pay every fortnightly (instead of monthly) - Divide the month payment into 2 and then pay the figure every fortnight (2 weeks). This is because although there are 12 months in a year, there are 26 fortnights in a year, and not 24!

4) Pay early (before the due date) - Naturally, the earlier u pay b4 the due date, the more u save on the interest charge. A realistic early payment date would be on the day u get ur salary.

5) Pay the loan anytime u have extra cash - Needless 2 say, u should pay the loan anytime u have some extra cash. This money may be from the yearly bonus, tax refunds, inheritance, etc. u can also transfer the money from ur EPF account 2 to reduce ur housing loan.

6) Maintain the same payment even when the interest rate drops - If the interest rate drops, the actual payment will also drop. While some banks want u 2 continuemaking the same payment amounts, some others will write & tell u that the payments have been reduced. But if u continued to make the same payments, the period will obviously drop. In turn, the total payment will also be reduced, therefore saving u much money in the process.

7) Increase the payment amount if u get a pay raise - If u lived well on ur previous salary, y not live on the same amount still? Use the extra money 2 pay off ur housing loan. Remember that u will not miss what u never had.

8) Sell off unused goods and use the money to pay the loan - Most of us will have some unused goods lying idly in the house. Y not cleared up that clutter, regain the space, improve the view, sell the goods to a 2nd hand store, etc. Everybody wins - u get money from idle stuff & the buyer gets a product at a discount.

9) Refinance the loan to another bank offering a lower interest - U could also reduce the total payments by refinancing the loan to another bank offering a lower interest charge. However it does not mean that a lower interest rate will automatically lower total payments. Some banks offer lower interest rates but they hit u with other fees which may include processing fees, maintenance fees, transfer fees & even mandatory mortgage reducing term insurance (MRTA). So what u have to do is to 1st calculate the total payments for both loans. Only when the total payment for the 2nd bank is lower than the original should u switch the loans.