Spend Money To Save Money
It seems counterintuitive, but spending a lot of money right now will actually help you save in the long run.
And while that is true in most circumstances, paying lump sums into your home loans may substantially decrease the principle amount you owe, thereby saving you what could be thousands of dollars over the term of your mortgage.
This is of course because of the interest your loan accrues over the years – while it may seem like a minimal amount on each payment taken on its own, this number begins to add up and increase substantially when combined with all of your other payments.
By taking that tax return or annual bonus and putting it as a lump sum payment towards your mortgage, you would be making great gains toward paying off your home loan debt.
And although it can be difficult to choose long-term prudence over short-term gratification, the rewards have the potential to be much greater.
For example, if you make regular lump sum payments that dwindle the size of your loan and interest, you have the ability to become debt-free much sooner!
You will then be able to reap more benefits, had you decided to just go ahead and spend that money on something else.
To get more detailed information on your situation, talk to a Loan Market mortgage broker today.