If you’re thinking about taking out a mortgage, or you’ve just got one for the first time, paying it off early may seem like an impossible task. It doesn’t have to be that way. By putting a few proactive strategies in place, you could save yourself thousands of dollars in interest without too many changes to your lifestyle. Here, Choice Home Loans gives you a few tips that will get you paying your home loan off that much faster.
Reorganise your payment schedule
Interest on a mortgage usually accrues daily, so by making payments more often, even if the total amount doesn't change, you can shave hundreds of dollars off your interest. For instance, if you get paid fortnightly, align your payments with your salary rather than waiting until the end of the month to make one larger payment.
If you receive a lump sum payment of any kind, such as a tax refund or work bonus, consider putting it straight into your mortgage account. It could help you cut years off your mortgage in the long run. See the difference a lump sum repayment could make by using our Lump Sum Repayment Calculator.
Depending on your loan type, there may be limits on any lump sum payments you make. You should talk with your mortgage broker about what restrictions there are on your home loan to avoid any penalties.
Get an offset account
An offset account allows you to hold your regular income as an offset against your mortgage to reduce the amount of interest you pay over the life of your loan. You can access your money just like you would a regular savings account, but it could you save thousands of dollars and potentially shave time off the life of your loan.
Fix your repayments – with yourself
Rather than lowering your repayments when interest rates go down, keep putting the same amount towards your mortgage each month. You’ll be helping to pay your home loan down faster. Similarly, if you get a pay rise at work, keep putting the same percentage of your wages towards your home loan.
Get the right advice
If you're interested in getting more advice about how to pay off your mortgage faster, or even refinancing to a better deal, a Choice Home Loans mortgage broker can help. Our qualified and knowledgeable brokers will go through your financial situation with you in detail, and give you the right options for your situation.
Make an appointment online today to speak to one of our experienced and friendly mortgage brokers.
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