Effective Strategies to Pay off Your Mortgage Faster and Avoid High Interest Rates

The topic of mortgage payments has been making waves on social media lately after a Facebook user shared his experience paying off a home loan from a bank. The user had to 10.900 Pay baht, but after deducting the loan amount only remained 5,50 Baht left, the rest was interest.

Today we want to share with you three simple and effective strategies to help you pay off your loan faster and avoid exorbitant interest rates.

The first method is to make payments on time. Not only does this help in properly reducing the loan amount, but it also maintains your credit score so that you are in good standing as a debtor. This may potentially lead to negotiations with financial institutions.

Late payments, on the other hand, can slow the reduction of your loan balance and lead to higher interest payments. For missing payment deadlines, you may be penalized with higher interest rates than usual.

The second method is to refinance your home loan to lower the interest rates. This can be done in two ways.

1. Refinance: Ideally, you should refinance every three years. Most banks offer particularly low interest rates for the first three years of repayment. Starting in the fourth year, interest rates typically increase and become variable. By refinancing, you can enjoy lower interest rates again. However, it can be time-consuming to prepare the documents for a new loan application and wait for the financial institution’s decision. Other costs may include fees for applying for a new home loan, property valuation fees, new mortgage registration fees and stamp duty.

2. Restraint: This is where you request a reduction in interest rates from your current financial institution (lender). The advantage is that you don’t have to change your lender, you can simply request an interest rate reduction. The advantage is that there are no fees for applying for a home loan and the processing time is shorter because the bank already has a record of your repayment history. The downside is that the interest rate may not be as attractive as refinancing.

The third method of paying off your home loan is to overpay or pay more than the fixed rate. This way you can quickly reduce your loan balance and therefore the interest you have to pay later. You can make an overpayment at any time if it is convenient for you and within your financial capabilities. This method is particularly suitable if you receive a bonus and want to pay off the house in full. However, good financial planning is crucial, otherwise problems may arise later, reports KhaoSod.