Buying a home is a significant milestone, but it's just the beginning of your homeownership journey. One of the most important aspects of homeownership is managing your mortgage effectively and finding ways to pay off your home loan faster. By doing so, you can save thousands of shillings in interest, build equity more quickly, and achieve financial freedom sooner. In this blog post, we'll share some practical tips to help you maximize your mortgage and pay off your home loan faster.
If you're new to the world of mortgages, be sure to check out our previous blog posts, "Mortgage 101: A Beginner's Guide to Buying Your First Home in Kenya" and "Mortgage 102: Understanding Interest Rates, Fees, and Repayment Terms," to build a strong foundation for your homeownership journey.
Section 1: Make Extra Payments
One of the most effective ways to pay off your mortgage faster is to make extra payments whenever possible. Even small additional payments can add up over time and significantly reduce the life of your loan.
- Round Up Your Monthly Payments
- If your monthly mortgage payment is KES 75,000, consider rounding it up to KES 80,000.
- The extra KES 5,000 per month will go directly towards paying down your principal, helping you pay off your loan faster.
- Make Bi-Weekly Payments
- Instead of making one monthly payment, split your payment in half and pay every two weeks.
- By doing so, you'll make 26 half-payments per year, equivalent to 13 full monthly payments, resulting in an extra month's payment each year.
- Apply Windfalls to Your Mortgage
- When you receive unexpected money, such as bonuses or gifts, consider applying a portion of it to your mortgage.
- These one-time payments can make a significant impact on reducing your loan balance and shortening your loan term.
Section 2: Refinance Your Mortgage
Refinancing your mortgage can be a smart strategy to secure a lower interest rate, reduce your monthly payments, or shorten your loan term. (Learn more about refinancing in our upcoming blog post scheduled for Saturday 22nd June titled "Mortgage Refinancing: When and How to Do It")
- Shop Around for the Best Rates
- Compare refinancing offers from multiple lenders, including KCB, to find the most competitive interest rates and terms.
- Even a small reduction in your interest rate can result in significant savings over the life of your loan.
- Consider a Shorter Loan Term
- If you can afford higher monthly payments, consider refinancing to a shorter loan term, such as a 15-year mortgage instead of a 25-year mortgage.
- While your monthly payments will be higher, you'll pay off your loan faster and save a substantial amount in interest over the life of the loan.
Section 3: Make Your Mortgage Work for You
Your mortgage is not just a debt; it's also a financial tool that can help you achieve your long-term goals. By making strategic choices about your mortgage, you can maximize its benefits and pay off your loan faster.
- Choose a Flexible Mortgage Product
- KCB offers a range of mortgage products with flexible features, such as the KCB Mortgage Plus and the KCB Advantage Mortgage.
- These products allow you to make extra payments, redraw funds, or switch between fixed and variable rates giving you more control over your mortgage.
- Offset Your Interest with a Savings Account
- Consider opening a KCB Savings Account and linking it to your mortgage.
- The money in your savings account will offset the interest charged on your mortgage, effectively reducing your interest payments and helping you pay off your loan faster.
Paying off your mortgage faster is not only possible but also a smart financial move that can save you thousands of shillings in the long run. By making extra payments, refinancing when appropriate, and making strategic choices about your mortgage product, you can take control of your home loan and achieve your homeownership goals faster.
And there you have it folks. That is all we have for you in this episode, but we will be back with more mortgage gems that you do not want to miss.
Ready to take the next step? Contact KCB Mortgage through email at KCBKenyamortgages@kcbgroup.com or call us through 0711 087 000/0732 187 000.
Until next time…
Over and Out,
Witty Banker.
