How to pay your home loan off faster (and save you money in the long term)
Taking on a home loan is now up there as one of life’s biggest decisions, along with deciding to get married and introducing a baby into the world. Although it can mean big changes to your personal and financial life, taking out a home loan shouldn’t have to feel like a restrictive thing. Here we look at some practical ways you can keep your home loan repayments under control, and pay your mortgage off sooner rather than later.
Go fortnightly, not monthly
Most people opt to pay their home loan monthly, but switching to a fortnightly plan can save you a lot of money in the long run. Making an extra two repayments per month reduces the amount you owe, and ensures you’ll pay less interest overall. If you’re careful with your budget planning, there’s little reason you can’t accommodate for fortnightly repayments and significantly cut your interest costs.
Pay what you can
Many people find that once they get into the process of planning their finances to meet their home loan repayments, paying off their mortgage becomes a far less daunting task than they had imagined. With this in mind, you should always be considering opportunities to pay off your mortgage as quickly as possible, whether that’s by decreasing your term from 30 to 25 years, or dropping a lump sum on your balance when you get an unexpected bonus or payout. Every little bit makes a difference so if you find that you have money to spare, think about how much it could save you in the long run.
Keep your payments steady
Interest rates rise and fall over time, which can make it difficult to get a fixed picture of your monthly repayments. With this in mind, it’s best to keep your monthly repayments the same, even when interest rates drop. This will allow you to pay more toward your principle, and eases the strain if interest rates go back up. Establishing a regular routine also helps to get you in the right mind-frame about your finances, and keep them under control.
Use an Offset Account or Redraw
An offset account is a transaction account that is linked to your home loan and can provide great additional savings on your home loan. Generally the money held in your offset account is applied against or offset against your home loan meaning you don’t pay interest on your home loan to the same value as the funds in the offset account.
If you need more advice about finding the right home loan for you, get in touch with the best finance brokers in Perth today. All Nation Finance are the best in the business for helping you to take control – and advantage – of your financial situation.
Contact Alan – 0424 185 442 or email: email@example.com