Who doesn’t want to pay off a mortgage early? Here are 5 tips to help you save more and allow you to potentially own your home faster.
The path to home ownership is an experience like none other and brings a wide range of emotions including joy and success through to sadness and even stress. It’s all worth it at the end when you own your home outright and no longer have to pay a monthly mortgage.
Why wait when you can possibly be mortgage free sooner? Here are some tips to consider paying your home loan faster, smarter and better.
We all know that the housing market is extremely competitive, but what most people often fail to do is to keep up with the changing times. For example, does your current loan fit well with your current situation? Are you sure you’re getting the most competitive interest rates possible?
The chances are if you check your rates, you will find out you’re paying too much. There isn’t any reason why you should be paying more interest than you need to and in this case, it’ll be worth negotiating with your lender to lower your interest rates. If they are unwilling to offer you a better deal, then it may be time to shop around and switch lenders as that may save you thousands over the lifetime of your loan.
Another tip to consider is to increase how often you pay. Switching to fortnightly repayments instead of monthly will considerably speed up paying off your home loan. If you can afford to increase the payment frequency, then this strategy will allow you to make some savings and own your home much faster.
Every penny counts as they say. Look to see where you can make some potential savings which can then be used to pay off your home loan faster. For example, instead of eating out often, eat at home instead and use the extra saving to put towards your monthly repayments.
Paying an extra $100 on your monthly repayments could enable you to save a lot on interest whilst also allowing you to own your home much sooner. Before considering this option check with your lender to see if making additional payments are allowed.
There are some loan features which could enable you save thousands on your mortgage if managed correctly. One of these key features to consider is opening an offset account. This account is linked to your home loan and can reduce the overall interest charged on your loan. So, let’s say your loan balance is $400,000 and you deposit $30,000 in your offset account. This means you only need to pay the interest of $370,000 rather than the $400,000. Essentially the more money you are able to deposit into your offset account, the more savings you will make as well as allowing you to pay off your loan that much quicker.
If you have any interest only loan and have the ability to switch, consider switching to principal and interest repayments. Through paying off the principal of your home loan it will reduce the total interest you pay over the life of the mortgage and potentially help you save more and pay off your loan faster!
Paying off your mortgage quicker can allow you the freedom to do other things you enjoy in life. Our specialist brokers are with you every step of the way to help you make better and smarter decisions on your home loans. We have helped many clients in Piara Waters, Thornlie, Harrisdale and throughout Perth, and we endeavour to achieve their goals.
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