Nobody likes to be locked into a mortgage for longer than they need to be. If you’ve been thinking about what you’d rather do with your mortgage repayments, it’s time to build a strategy to pay that debt of sooner.
Extra repayments: early and often
Additional repayments can significantly reduce the term of your loan and the total cost of interest, and the earlier you start, the greater the potential savings. There are few ways you can go about it, like increasing the frequency of your repayments. using a bonus from work (or other windfalls) to make a lump sum payment, and increasing your regular repayment amount.
Not sure where to start? Give us a call and Vaughan can talk through your options to help you understand what the impact of additional repayments would be on your mortgage.
Put your savings to work
If you have savings, it’s worth considering using these to reduce your home loan interest costs. Here’s how it works: let’s say you have savings of $50,000 in an offset account and a home loan of $450,000, instead of paying interest on the total mortgage amount of $450,000, you would pay interest on $400,000- a significant savings.
It’s not just interest rate that counts
Break fees, establishment fees, ongoing fees – home loans come with costs other than interest rate and it’s important to know what these are. Like interest rates, fees are negotiable, so if you’re looking at ways to pay your mortgage off faster, but are unsure about the associated fees, give us a call.
Give your home loan a regular health-check
It’s not always a good idea to switch lenders based on interest rate – break costs, fees and other factors need to be weighed up as part of the equation. But, it is always a good idea to keep your mortgage top-of-mind and give it a regular review. If you think it’s time to go back to your lender and see what they can offer for your continued business, get in touch for a complimentary home loan health-check and conversation about your options.
A pinch of wisdom
One of the simplest ways to say goodbye to your mortgage faster is to apply a solid saving vs spending mentality to everyday life. Even the smaller things count: that morning coffee, the extra magazine at the check-out, can all add up to a sizable amount which can be redirected into your home loan. It may seem like a drop in the ocean, but you’d be surprised at what you can save.
Use the experts in your corner
We’re here to help. If you’ve decided that you’d like to say goodbye to your home loan sooner, let’s get together and talk about the different approaches and options for your personal circumstances and goals.
An Adviser Disclosure Statement is available free and upon request.
Published on Monday, June 5th, 2017, under Finance