Tips On Paying Off Your Mortgage Faster
There’s so much build-up to getting your first home loan, that we seem to forget about what comes next.
If you already have a mortgage you might want to start thinking about how you can pay your loan off quicker.
While a loan term with up to 30 years sounds like a big feat to accomplish, we believe that with the right approach, paying it off doesn’t have to be stressful and you should be able to clear it much faster than that.
Here are our top tips for working with your mortgage over the years to come.
Match your income with your repayments
It’s a great idea to match your income payments with your repayments. By this we mean that if you’re paid monthly then have your mortgage repayments taken out on a monthly basis too. This also ensures you have the funds to pay it straight away, and will never miss a payment.
Paying your mortgage as your income is received will ultimately reduce the interest you pay over the long term and you’ll feel less stressed about having money in the bank to meet the repayments.
Increase your repayments
With our record low-interest rates, now’s a great time to increase your repayments if your income stream allows.
Extra repayments can cut your loan by years. Even a small increase of $50 can make all the difference to the interest you’ll save.
However, remember to check with your lender if there is a fee for making extra repayments. Or ask your mortgage broker to check for you.
Ask for a lower interest rate
Despite banks passing on interest rate cuts, you still may not be getting the best interest rate available.
Simply call your bank and ask them for their best price, especially if you have been on a fixed rate home loan that has automatically switched to a variable rate because it’s unlikely they applied any pricing discount. A mortgage broker can also make this call for you.
For a mortgage of around $400,000, you should be able to get an interest rate below 3 per cent, and depending on where your interest rate is sitting right now – savings can be thousands per year.
Review your home loan
Many people don’t realise that by getting your existing home loan reviewed by a mortgage broker, it can also save you money in the long run.
You might not be getting the best rate anymore. Or you might not have reviewed your home loan because the task seems daunting and time-consuming.
A mortgage broker can take the pressure off and do all the hard work for you. All you have to do is make the call.