5 Tips for Salaried Employees to Pay Off Their Mortgage Quickly
Owning a house or condominium may be a major goal for many salaried individuals, for various reasons such as securing life stability, expanding living space to start a family, or long-term value compared to renting.
However, most real estate loans are long-term, around 30 years, taking half a lifetime to realize. The monthly payment varies depending on the bank's interest rate, and the installment is divided into "interest" and "principal" payments, which can be discouraging for salaried employees.
Here are 5 tips for salaried individuals to help manage their finances, pay off their mortgage faster than planned, and achieve their dream of house ownership:
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1. Round up your monthly payments to a manageable amount, but not so much that it becomes unstable. Focus on making consistent payments over the long term. For example, if you normally pay 13,500 baht per month, round it to 15,000 baht. This means paying an extra 1,500 baht per month. This extra amount may seem small, but it can make a big difference. However, in the long run, if done consistently every month, it can help reduce the principal without waiting for a lump sum payment.
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2. Make a lump-sum payment: For salaried employees with high monthly expenses who cannot consistently follow the first technique every month, a lump-sum payment can be used to reduce the principal. For example, using a year-end bonus, allocate a portion to pay off the mortgage. This will reduce the principal and save on interest. Making lump-sum payments in the early years of paying off the mortgage is ideal, as interest rates are relatively low during this period, allowing for greater principal reduction.
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3. Refinance your house: A popular technique that effectively reduces interest. Refinancing is typically possible every 3 years. This involves switching your mortgage from your current bank to a new one with a lower interest rate. However, switching banks involves various fees. Therefore, before refinancing, calculate whether the final cost after deducting all fees will actually result in lower monthly payments.
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4. Retention: Another technique for those who don't want to refinance to a different bank is to apply for a lower interest rate with their current bank. This allows the bank to consider adjusting the interest rate to a lower one without the need for a new application process. However, while retention seems more convenient, the interest rate reduction is usually not as significant as refinancing to a new bank. Nevertheless, it's still lower than the floating interest rate in the fourth year.
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5. Reduce Principal, Don't Reduce Monthly Payments: After refinancing/retention, monthly payments will decrease due to the lower new interest rate. However, to pay off the loan faster, maintain the same monthly payment to reduce the principal. This is another way to pay off the loan quicker without making large lump-sum payments.
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These five techniques serve as a crucial guide for salaried employees to unlock their house loan debt and achieve financial freedom and houseownership faster. Refinancing every three years is especially key to preventing interest from accumulating. Salaried employees still caught in a mortgage debt cycle can adapt these techniques to suit their individual financial management strategies and financial readiness, significantly helping them pay off their mortgage faster.
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For salaried employees looking to refinance their house loan, TTB Refinance is a great option that can save hundreds of thousands of baht in interest and provide a shortcut to paying off mortgages sooner. Currently, TTB is offering a year-end promotion with reduced interest rates: a special fixed rate of only 1.90% per year for the first year (from the usual 2.25% per year), or a fixed rate of only 3.29% per year for the first 3 years (from the usual 3.49% per year). This also includes free property appraisal fees, fire insurance premiums, and a special interest rate option with free mortgage registration fees. Furthermore, the repayment period can be up to 35 years, with a maximum loan approval amount of 100% of the property appraisal value or 50 million baht, helping customers achieve better financial lives now and in the future.
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Thank you for the valuable information from Thansettakij.
