Anyone who has ever had a mortgage will tell you how they would love to pay-off their debts faster & dream of a debt-free lifestyle. We are sure you would like your pockets to be bulging with saved cash.
Your home loan is probably your biggest investment & with some smart strategies, you can slice thousands of your interest payments. To help make that dream a reality, here are a few tips & hints to pay off your mortgage faster.
1) Align your Mortgage Payments in-line with Your Payment
If you are being paid fortnightly, schedule your payments fortnightly. Doing this cuts down on your interest payable and will help you save a lot of money over the course of your home loan tenure.
2) Look beyond the Big Banks
It’s not just about reputed names, you can also find small lenders that will find you a more personalized service such as lower interest rates, lower ongoing fees, longer long terms fixed rate with 100% offset account, higher lending ratios and much more.
3) Keep your lump sum payments for home loan payments.
If you receive an unbudgeted lump sum of cash each year like a work bonus, tax refund or some investment dividends, then consider dumping those lump sum amount into your mortgage payments. Its money you’ve learned to live without to this point and chances are you’ll never miss you’ve never had.
4) Home Loan Offset Account
An offset account is a transactional savings account linked to your home loan. When interest on your home loan is calculated, the balance of your offset account is taken off the principal amount owing. This can reduce the amount of interest you are charged and help you pay off your principal and interest home loan faster.
Say for example, you have a home loan of $600,000 with an interest rate of 5%. If you had $100,000 in your in your offset account, you’d only be accruing interest on $500,000 of your home loan. This means you’d pay $25,000 in interest per annum rather than $30,000, saving you $5000 per annum.
5) Annual Home Loan Health Check
In a competitive market, lenders will compete for your business, so take out some time every year & do a home loan health check to see what offers are available. On doing so, you may realize that your loan might not be the best fit for you anymore.
If you’ve reviewed your home loan and found it doesn’t suit your needs, look at refinancing whether it is with your existing lender or a different one. This will result in savings and help reduce the term of your principal and interest loan.
7) Always consider your Home Loan a Priority
Having control on some of your less important expenses can add up to significant savings over time. Whether it be your weekly shopping, electricity bills or other household expenses. There’s no point overpaying for things you do, so find where you can compromise a bit & make some cuts. You can use these savings to make additional payments on your home loan that will in return help you secure a debt-free lifestyle much sooner.
For advice on how you could pay off your home loan faster, contact us and get a free consultation with our experts.