Buying a house is often the biggest purchase you’ll make in your life and committing to a 25 or 30-year home loan can be daunting. We’ve compiled a list of 5 simple ways to cut years off your mortgage and potentially save you thousands of dollars in interest. Now wouldn’t that be nice? Read on to find out how!
With all the comparison sites in the market today, shopping around for a lower interest rate is easy. When you find one, ask your current lender to match the rate – many of them will want to keep your business – and if not, make the switch!
But here’s the real trick… Instead of reducing your payments, keep them the same so you pay off your mortgage faster without impacting your take home pay.
There are 26 fortnights in a year, but only 12 months.
By switching to fortnightly payments you’re effectively making 13 monthly repayments a year instead of the usual 12. This can ultimately make a big difference over the life of your loan.
Having an offset account will allow you to make additional repayments on your mortgage that you can withdraw at any time.
When your pay gets put in your offset account, you reduce the size of your mortgage for the period that the extra money is in the account, which reduces your interest repayments, helping you pay off the debt faster.
Some lenders allow you to add your mortgage fees and charges to the amount you borrow, so you don’t need to have the cash up front.
If you pay these off at the start, you’ll save money down the road and reduce the initial size of your home loan.
One of the best ways to pay off your mortgage faster is to protect yourself against interest rate rises. If your home loan rate starts to rise, it’s not good news if you owe money on a credit card or have a personal loan because these types of debts usually have much higher interest rates than your home loan.
Some providers will allow you to consolidate these loans under the umbrella of your mortgage, helping you clear all your debts faster by paying less interest and paying more off the principle amount you owe. You could even redirect the payments you were making to your personal loan or credit cards to your mortgage as extra repayments and help pay off your debt even faster again.
Getting ahead isn’t just about making necessary repayments. Our smart saving tips require a small amount of effort in the grand scheme of things and could help you save thousands of dollars!
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