How to Pay Off Your Mortgage Early

3 May, 2023 | Alba Tebar

Paying off your mortgage earlier than expected is always a good idea to help you have financial stability. Furthermore, you can save money in the long run, as you are accumulating less interest. So, as you can see, there are several reasons why you could benefit from paying off your mortgage early, which we will further develop in this article. If you have a mortgage in Spain or are planning to buy a house here, it is always a good option to consult this article and try to save some extra money.

Therefore, let’s explore how you can do it to pay off your mortgage early in Spain. In Hipotecasplus we will guide you throughout the whole process, adjusting your needs to each situation, and giving you the best advice so you can obtain the biggest economic benefits for yourself as possible.

In case you do not know us, Hipotecasplus is a mortgage broker from Spain who has been working in that field for a lot of years, so we have a lot of experience. Our team will help you with everything you might need and will negotiate with Spanish bank entities in order to obtain you the best mortgage of the market, according to your needs and interests. Because, as we like to highlight, there is no perfect mortgage. Instead, there are different perfect mortgages: you only have to find the one that better fits for you!

So, in case you are planning to settle down in Spain and need some guidance and advice, do not hesitate to contact our team. We will be more than happy to help you find the perfect house and the perfect mortgage for you! And, remember, you can get in touch with us for free and with no need of commitment!

Tips to pay off your mortgage early

Arrived at this point, it is important to remark that there are some tips you could do in order to pay off your mortgage early. Next, we will explain them all to you:

  • Refinance to a shorter term

In case the interest rates go down, it is a good idea to refinance your mortgage to a shorter term. For example, you could negotiate with your bank entity to change your term from 30 years to a 15-year mortgage.

On the one hand, it is true that this option is likely to bring you higher monthly payments. But, on the other hand, this will help you pay off your mortgage faster and, what’s more interesting, save money on interest. Because, as you might know, long-term mortgages have a big red flag: you’ll end up paying more in terms of interest.

  • Make extra payments

By this way, you could do a win-win: on the one hand, you’d be able to save money from interest; and, on the other hand, you’d shorter your mortgage term. This is probably one of the easiest ways to pay off your mortgage early, because you can do those extra payments whenever you can, depending on your current economic situation. So to say, you could adapt you yourself!

In that sense, imagine you do an extra payment once or twice a year. Well, this would not be a big effort, but at the same time, you would be reducing the amount of interest you pay over the life of your mortgage. So, a small sacrifice in the short term could help you enormously in the long term.

Anyways, remember to tell your lender that your additional payments must be applied to the mortgage capital itself, and not the interest. Otherwise, your bank would apply those payments to future scheduled monthly payments, which would not save you any money and the effort would be useless.

  • Increase your monthly payments

Another way of paying off faster your mortgage is by increasing your monthly payments. Keep in mind that even small increases can make a big difference over the life of your mortgage. For example, you could do a round-off every month when calculating your monthly payment.

Let’s put an example: imagine you usually pay a total amount of 650 euros per month. So, instead of paying the bank this amount of money, increase it a little bit and pay 700€. This is an example, you have to ask the bank what is the minimum amount for which you can advance money. If your domestic economy can easily afford it, that’s a good idea to finish before your mortgage term.

  • Benefit from windfalls

And, last but not least, you can also benefit yourself from windfalls to make extra payments. For example, if you receive a bonus at work, a tax refund, or a price, for example, you can decide to use it to make and extra payment on your mortgage.

The good thing here is that you would not notice the negative impact on your economy, because it would be money you were not going to deal with anyway. And, nevertheless, it can help you a lot in the long term when it comes to mortgages.

Why should I pay off my mortgage early?

It is unavoidable: everyone wonders if it is worth it to pay off their mortgage early. As we like to say in Hipotecasplus, every person and every situation is a world apart; however, it is true that there are lots of benefits when you pay off your mortgage early.

If we focus on a long-term perspective, getting rid of the mortgage ahead of schedule is magic. First, will be able to face any unexpected payment with less concern. Furthermore, you will strategically skip additional interest in the long term. And finally, your economic stability will be reinforced, and you’ll breathe more peacefully than ever before.

So, remember that, if you have any doubts regarding this topic or anything related to mortgages, you can contact Hipotecasplus with no commitment, and we will happily help you solve it. Do not think it twice: we are already waiting for you!

Are you planning to pay off your mortgage early? Will you have to pay charges or compensation? find out what the Bank of Spain says-