How To Pay Off Your Mortgage Quicker
Mortgage repayments are often the biggest bills home owners face each month. A mortgage is one of the largest financial investments you will probably ever make, and paying it off sooner brings a special sense of freedom. The idea of owning your own home and becoming debt free is irresistible, so what are the best ways to help reduce the cost of your loan and get rid of it for good?
Align Your Repayments With Your Income
A mortgage is typically set up on a monthly payment basis, but if you get paid fortnightly, or even weekly, make your mortgage repayments at the same time. This can significantly reduce the interest payable and definitely save you a lot of money over the life of your home loan.
Make Extra Lump Sum Repayments Whenever Possible To Your Home Loan
If your home loan facility allows for additional payments to be made outside of the scheduled repayments, take the opportunity. Making lump sum repayments reduces the principal amount, therefore reducing the interest payable too.
You may receive a tax refund, quarterly dividend payments or a bonus from work. Adding these lump sums will go a long way to paying off your mortgage faster. These extra payments are usually also considered redraw and, depending on your loan terms, you then have the added flexibility of being able to access this equity if you need it.
If Interest Rates Drop, Don’t Drop Your Repayments!
Cuts in interest rates are a wonderful relief for many; however, by keeping your mortgage repayments consistent, you will be paying more off the loan than the minimum required and effectively making regular additional payments. The extra money will cut years off your loan.
Choose A Home Loan With An Offset Facility
An offset facility is basically a savings account that is linked to your home loan. Any money you have in the linked account is subtracted from the interest payable on your loan. For example, if your home loan is $350,000 and you have $50,000 in your savings account, interest charges are only calculated on a balance of $300,000. You save without needing to do anything at all!
Take the time to regularly review your loan. Simple adjustments to payment amounts or frequencies could make a big different. Seeking guidance is a great way to ensure that the loan terms are the best on the market and that you are managing your loans in the smartest possible way.
Know someone who will find this useful?
Share this with them!