Are you looking to pay your mortgage off sooner? Here are three strategies that will encourage you to effectively reduce the life of your home loan.
1. Make your repayments on a weekly basis
There are 26 fortnights or 52 weeks in a year, but only 12 months. Having monthly repayments, means that you are effectively paying off less of your loan each year. By increasing your repayment frequency, you can save thousands of dollars (and years) over the term of your loan. Try splitting your monthly repayment amount in two and paying fortnightly (or even weekly) – the balance will be reduced through more regular payments, resulting in the interest being calculated on a lower balance.
2. Align mortgage repayments with your income
If you are paid weekly or fortnightly, set up your home loan repayments to match that frequency. Having the ability to make repayments on your mortgage as soon as possible minimises the interest you pay. Week by week the effects of this are small, although over the term of the loan, these minor savings can add up to help pay your home loan quicker.
5. Get the best rate and evaluate the health of your mortgage
The easiest way to ensure you’re saving money is to review your current home loan every year. It’s as simple as checking your most recent statement or logging into your online banking. You may find that your loan might not be the best fit for you any more – your particular product may have been superseded or interest rates may have changed drastically.
In that case, it pays to perform a home loan health check every 12 months or so.
We regularly offer our clients home loan health checks. Feel free to send us your most recent statement, or give us a call on (02) 8303 2318 and we can take a look to see if your product is still competitive.