You can repay your mortgage loans without any risks if you follow the simple guidelines we have listed here. Early and delayed repayments may attract penalties at some of lending companies, so you have to plan your repayment according to the plan given by the lending company.
While it’s nice to have a payment plan in any situation, we can’t always foresee the future. Which is why it’s important to have a plan if and when you run into any financial hiccups.
Plan for Your Mortgage
Salary Deduction: Follows the payment schedule for principal and interest every month. If you are employed, the best way to pay off your mortgage is to deduct the loan at the source. It is possible to link your mortgage with your salary account, all you need to do is consult your company’s finance department and complete the required formal procedures. Then you don’t need to worry about allocating a fund for repayment every month. Moreover, you may get the benefit of tax deductions in your salary while paying for the mortgage.
Fund Allocation: If you are self-employed or a business owner, it is possible to plan your budget for your mortgage repayment but you have to do it before applying for the mortgage loan from the lending company. Only then can you adjust your other funds and ease your repayment.
Calculate Affordability: In both the cases above, you need to calculate your repayment capacity before applying for a loan. Discuss with your family about the restrictions they have to face on non-essential expenses to ensure that you’re all on the same page.
Clear Debts: Clear all other pending debts before applying for a mortgage. It is a good practice since you can win the trust of the lending company. It will also put you in a financially comfortable position. You don’t need to worry about making multiple payments and running the risk of being penniless.
Credit Rating: Make sure you have a high credit rating. You can make most of your purchases through your credit card, which will help in creating a base for credit rating. But be sure to make all the credit card payments within their deadlines. It is the only method of boosting your credit rating for the mortgage lending company to evaluate and trust.
Plan for Expenses
Plan your personal, family and household expenses at the start of the month. Categorize them into critical, emergency, and essential groups. All others will be non-essential. Eliminate the non-essential expenses and optimize the rest. Make sure you have sufficient funds for emergency and medical expenses.
Plan for Extra Income
Every financial plan you make for a mortgage will be automatically accompanied by the need for generating extra income. It is the most comfortable way of allocating funds for your loans without having to be miserly on other expenses.
You may choose to take a part time job, freelance work, or choose other stable sources of income. It should be sufficient to repay the principal and the interest every month. Physically and mentally you may have to strain more in your everyday life. But your financial position will be stable throughout the repayment period and after the completion of the mortgage.