Tips and Tricks
How to Pay Off Your Mortgage Sooner and Save $$$$$
Buying a home is one of the biggest financial decisions you
will probably make in your life. So it is
worth doing a bit of research and choosing the most suitable home and most
suitable home loan. If you
do not choose the best loan that best suits your financial circumstance, you
could potentially pay
$$$$$ more than you have to.
Below are 10 tips you might consider when paying off your mortgage. They may
help you save
$$$$$ and own your home sooner.
Tips for
quicker
financial freedom
Tip 1 - Pay off your mortgage as quickly as you can
The longer you take to repay your principal loan, the longer and more
interest you will pay. It is best to start your first repayment right after the
settlement date.
Tip 2 - Make Additional Repayments
Make additional Repayments. Choose home loan products that allow increased
regular repayments and
lump sum repayments without penalty, take advantage of it whenever you can.
One of the best ways to reduce your mortgage is to make additional repayments.
Do not just pay the
minimum required payments. If you can afford to pay a few dollars extra each
payment, then do so. For
every $1 you contribute to your monthly payments early in the loan, $2 will be
saved in interest over
the term of the loan (subject to interest rates).
Tip 3 - Set up an Offset Account
You may put all you income and spare cash into this account then draw it out
when you need to. The
money you put in to this offset account is deducted from your home loan balance
before interest is
calculated. This is an excellent way to reduce the interest you pay on your home
loan.
Use a credit card (with an interest free period) for your day to day expenses.
Tip 4 - Make Fortnightly Repayments
Dividing your original monthly repayment into two fortnightly payments means
you actually pay more
over at the end of the year. The extra repayments help reduce the interest being
charged.
Tip 5 - Fixed Interest Rates
If you are in a volatile market and think that interest rates may rise, you
can protect yourself by
fixing the interest rate for 1,2,3,4,5 years. You may even split your loan and
fix only half if you
wish.
Tip 6 - You may qualify for a 'professional package' discounts
These type of home loan products are aimed at high income earners who are
generally regarded as low
risk borrowers. Some lenders will offer a 0.5% - 0.7% discount to borrowers who
earn over $50,000.
These usually attract an annual fee of around $300 - $350.
Tip 7 - Consolidate your debts
If you have car loans or personal loans, consider consolidating your debt in
your home loan. The home
loan rate is lower than your other loan. You will save thousands this way.
Tip 8 - Look out for ongoing and annual fees
Many banks charge an account keeping fee or loan access fee. These fees and
charges are either
charged monthly or yearly for the life of the loan. These fees range from
$8/month to $25/month and
can add up to thousands of dollars during the term of the loan.
Tip 9 - Compare loan features not just interest rates
You need to make sure that you choose the right home loan so you can take
advantage of these interest
rates. Paying a higher interest rate for a product that is flexible may save you
more money than a
product with a lower interest rate that does not allow you to redraw or make
additional repayments.
Choosing the right loan that best suits your financial needs is paramount.
Tip 10 - Use a Mortgage Broker
By using a mortgage broker to arrange your loan, you will save a lot of time
and have immediate
access to hundreds of loan products to choose from. They will be able to explain
to you all the home
loan technical jargon so you can make an informed decision.
Any Home Loan can support Australia's Homeless
Hundreds of loans from a wide range of bank and non-bank lenders
Fees & Charged are NOT increased to cover donations
