When was the last time you looked closely at your loan, the progress you’re making on paying it off and how it compares to other home loans.
Taking a close look at your mortgage could mean savings for you, as well as the opportunity to pay it off faster.
Make your payments more often
If you pay your mortgage monthly, consider changing to fortnightly repayments. For example, if your mortgage equates to $2400 a month, cut this in half and pay $1200 each fortnight. As well as having more manageable payments to make, by the end of the year you will have paid off $31,200 rather than $28,800.
Pay just a little bit extra
A minimum repayment is just that – for most loans there is no reason you can’t pay more, whether here and there or regularly.
By rounding up to a full number or contributing an extra $100 or even $10, you’ll significantly reduce your mortgage. It may also be worth considering putting all bonuses, tax returns and gifts into your mortgage.
Don’t decrease repayments when interest rates fall
Even if your repayments are lowered when interest rates decrease, by keeping your repayments at the same level when interest rates are lower, you will pay more of the principle with each payment and pay your loan off sooner.
Have an Off-Set Account
If you can, use an offset account. A mortgage offset account is linked to your loan and the interest payable on the loan from month to month is calculated by deducting what is in your offset account from your current loan. For example, if your mortgage is $500,000 and your offset account has $10,000 in it, you will only pay interest on the remaining $490,000.
An offset account will save interest while still giving you access to your savings. It also means investors can preserve the tax deductibility of the mortgage.
Find a better deal
Your mortgage needs to suit you and your circumstances, or you’ll be paying too much. If you think your current loan no longer suits your situation, please speak to us. We will be able to find the right loan or for existing clients, a better loan for you, as well as negotiating the best rates on your behalf.