If you are one of the millions of Australians who have ventured into the property market and are pondering whether to reduce your home loan repayments alongside recent rate cuts, then read on.
But rather than lowering the repayments, why not put your mortgage under a microscope and leave repayments as is so you save money and time over the loan term?
Mortgage Choice Senior Corporate Affairs Manager, Kristy Sheppard said, “When a borrower sees the mortgage landscape or their personal circumstances change, it is always in their best interests to take a good, hard look at their mortgage product and repayment strategy”.
“A mortgage is often the biggest financial commitment a person makes so don’t get lax with your money mindset once you have gotten into the groove of repaying. Reassess your strategy on an annual basis at least, to make sure you’re doing everything in your power to pay it off as best you can”.
Mortgage Choice, Best in the Mortgage and Finance Industry*, has the following tips:
Lose those luxuries
Consider just how much you really need to spend on little luxury items such as buying magazines, boutique alcohol and all those tempting takeaways: how much do you really need them? They could be costing you more than you think!
A slice is nice
Take a slice out of your social expenses, even by one night per month, and contribute that extra money to your mortgage instead. You may be surprised to find it has a significant impact on your loan over the long term.
Fine-toothed comb
Review your past year’s budget and expenditure to see what aspects of your spending you can move around to see if you can add extra dollars to your mortgage.
No frills and necessities
If you have a loan with a number of features that you don’t use, it is likely you are paying a higher interest rate than necessary. If you don’t use all the loan facilities offered, consider refinancing and switching to a more basic product with a lower rate and/or less fees. Then, you may be able to afford to pay your home off sooner. Of course, you must consider the costs involved with switching loans.
Dare to compare
Compare prices for various products and services you use regularly. Break from tradition if it means you save money. Every little bit extra counts.
Bus, train, walk…
Walk, take advantage of public transport or car pool instead of driving or using taxis. You may get fitter and it’s beneficial to the environment.
Stomach this
Do your grocery shopping on a full stomach, to avoid buying unnecessary snacks and impulse buys. Also make sure you write a list beforehand then stick to it, all the while comparing costs for different brands.
Stay on track
Don’t get complacent. Keep checking you’re doing the right thing by your mortgage, at least on an annual basis.
* 2008 Mortgage & Finance Association of Australia Awards
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