It’s an appealing prospect and the good news is that most of us can achieve these savings simply by looking at ways we can pay off our mortgage sooner.
Early repayments, extra repayments and more frequent repayments are all effective ways of lowering your interest bill and reducing the life of your loan subject to the terms and conditions of your loan.
Every little bit extra you can put on your home loan now, can save you dollars in the long run. Even just switching to a weekly or fortnightly repayment schedule can save hundreds or even thousands of dollars by year end.
When it comes to the race to be mortgage-free, it’s the speedy hare not the slow tortoise that will cross the finish line first! Here are some tips for speeding up your home loan.
Make more frequent repayments
Pay fortnightly or weekly instead of monthly. Mortgage interest is calculated on a daily basis so the more frequently you pay, the more you will save, even if you are not actually paying any more than you used to.
Make additional payments
You mightn’t have much spare cash floating around to make extra repayments, but keep in mind that every bit helps, even if it’s only $10 a month. Every dollar you put on your repayment will reduce the principal and therefore the interest payable next repayment. This saving then compounds, making a significant impact over the life of your loan.
Make early payments
The effect of this compounding interest over time means that you’ll maximise your cost savings by making extra repayments early in the life of your loan. Dollars paid into your mortgage early on – when most of your repayments go to pay off the interest – are especially good at speeding up your home loan.
Other ways to pay off your mortgage faster? Services like offset accounts, redraw facilities and lines of credit are there to help you shorten the life of your loan.
We can tell you more about these services, the terms and conditions that apply and help you tailor a plan that will match your mortgage and lifestyle requirements. You may be surprised at the number of strategies you can use to help save on your mortgage.