Having a house is not only about a place where you stay or a property on which you have invested, intending to turn it into a source of income, but there is much more to it. It is an asset that you possess, which you can use in your favour if you are ever in a crisis.
Having a house makes your financial portfolio stronger, and you can easily get a loan.
How Having A House Benefits Secured Personal Loans?
Your house can act as your collateral, and thus not only will your loan get approved quickly, but you will also get it at a lower rate of interest.
A secured loan can get you cleared of consumer debts like your credit card bills. And repayment of your loan on time will help you to improve your credit score.
Overall, we can say that if you are a house owner and you need some liquid funds, use the house in your favour.
A loan is also a kind of debt. When you take up a loan to solve one problem, you also must remember that the loan debt is also becoming a burden on your shoulder. So, it is only better to make all the payments for the loan as soon as possible.
How to clear your loan faster?
Increase the amount of monthly payment
Once you clear your other debts and are somewhat in a stable position, you can increase the monthly payment for the mortgage loan you have taken. For example, if it was $50 previously, make it $100. This will reduce your mortgage years by several years. And in turn, you will save a lot, as the interest money will come down by a considerable margin.
Instead of monthly, you can also make weekly or bi-weekly payments, if you can make it.
Make lump-sum payments
Check your mortgage contract. If you are allowed, then you can also make lump-sum payments along with the regular payments. This will also help you pay off the loan early, and you can save money by paying less interest.
However, do not pay anything exceeding the prepayment privilege value. Then you will have to face the prepayment penalty, and it will become an extra expense.
Being a homeowner, you can also consider refinancing your home. You can gain many benefits from it. Like:
- There will be lower rates of interest, so the monthly installment amount will also decrease.
- It leads to consolidating debt. Thus, there will be free liquid cash in your hand to take care of other debts that have high interest, like credit card bills.
- If you get extra funds from any source like work promotion or tax refund, use it to make mortgage payments. Refinancing an open mortgage can help you to get better prepayment privileges. However, if the interest rate drops, you should stick to the fixed-rate system to take advantage of the low-interest rates.
In conclusion, it can be said that using your house for getting loans and paying off debts is an intelligent decision. You have to be smart while making these financial decisions, and then you can solve any of your debt situations smoothly, without taking too much pressure.