Farewell your loan faster
After the initial excitement of purchasing property has worn off it can be easy to slip into ongoing loan repayments without too much thought. But by doing this you could miss out on opportunities that could save you thousands and help pay off your home loan faster. Here are my top three tips on paying off your home loan as quickly as possible.
There’s no time like the present
You pay the most interest on your mortgage in the first few years because this is when the principle is at it’s highest amount. The sooner you’re able to make additional repayments and reduce your home loan principal the better. By doing this you’ll reduce the interest you pay over the life of your loan.
Make extra repayments
Our situations are changing all the time so review your potential to make additional repayments regularly. You can pay off your loan sooner by increasing your repayment frequency, your repayment amount or in lump sums when you can afford it.
Increasing the frequency of your repayments to fortnightly or weekly intervals is the equivalent of making 13 monthly repayments a year. Over the years this additional repayment can make a significant difference to the life of your mortgage.
If your income increases or you’re able to make savings on your expenses, try to up your repayment amount. If your variable interest rate dropped following the recent Reserve Bank rate cut, try to maintain the same repayment amount to eat into your principal.
If increasing your ongoing repayments isn’t possible, try making additional repayments when you can or use your tax return or bonus to make lump sum deposits.
Stay motivated by tracking the impact these extra repayments are making to your loan term. You can use your Loan Market online calculators or I can talk you through how many years you could shave off your loan by making additional repayments.
Use an offset account
You can save on interest by using an offset account for your everyday banking, The balance of your account is offset daily against your outstanding balance which reduces the interest payable on your loan. If you don’t currently have an offset account, talk to me about your options.
Check in with your mortgage broker
Changes in the market influence the competition between lenders so there are new products and offers becoming available all the time. Reviewing your home loan with me regularly can ensure you’ve always got a loan with the right amount of flexibility at the right price. If refinancing is an attractive option, I’ll be able to make sure the costs don’t outweigh the benefits.