October 21, 2014 by Nicole Spiteri
Face your financial fears: Five tips to become mortgage free faster
If your mortgage debt is sending chills up your spine, it is time to do something about it. Local Mortgage Choice Franchise Owner Des Nation said while it is not uncommon for borrowers to be spooked by their mortgage debt, the commitment of taking out and repaying a home loan need not be scary.
“If you’ve never had a mortgage before, it's important to realise that it doesn’t have to take 25 or 30 years to pay off a home loan, nor does a mortgage have to mean an end to all of life’s luxuries,” Mr Nation said.
“A little research and planning can go a long way towards helping you pay off your mortgage sooner rather than later.”
For those looking to get onto the property ladder or with a mortgage already, here are some tricks and tips to help you become mortgage-free ahead of time:
- Can't pay more? Pay more often: Depending on how your lender calculates your mortgage repayments, making fortnightly mortgage repayments rather than monthly mortgage repayments could potentially save you thousands of dollars in interest costs on your loan. This is because there are 12 calendar months and 26 fortnights in a year. So, if you pay fortnightly, you actually make the equivalent of thirteen monthly repayments per year.
- Cut down on treats: Even small amounts can make a major difference. For example, if you cut out one coffee a day, you can save yourself approximately $20 every working week or $80 a month. If you then put that money into your mortgage, you could potentially shave more than three years off your loan term and save yourself more than $32,000 in interest payable over the life of your loan*.
- Get a mortgage with an offset account: With these loans, all of your salary can go into a transaction account that is linked to your mortgage. Every dollar you keep in this account is offset against your loan, working to reduce the balance on which interest is calculated as you only pay interest on the difference between your home loan and your savings. Used carefully, this can put you thousands of dollars ahead on your repayments.
- Use redraws wisely: A redraw lets you take out any extra payments you've tipped into your home loan. It can be a handy feature, but use it sparingly. Dipping into your loan too often will reduce the interest savings made by the extra repayments, and you may also be charged a fee for each redraw.
- Give your home loan an annual health check: In a competitive market, it pays to not be complacent about your home loan. Australia’s lenders are offering competitive rates at the moment and an annual check-up with the help of your mortgage broker can show if your loan is still the best option for you.
If you would like learn more about your home loan or financial advice options, call (02) 9833 8177 or visit www.mortgagechoice.com.au/Des.Nation
*Calculation based on a $300,000 principal and interest loan at 5% with extra contributions made from the first year of a 30 year loan term.
For further information or to arrange an interview, please contact:
Des Nation
Mortgage Choice
0412 709 700
Des.Nation@mortgagechoice.com.au
Important information
This article is for general information purposes only. It has been prepared without considering your objectives, financial situation or needs. You should, before acting on the advice, consider its appropriateness to your circumstances.
About Mortgage Choice
Mortgage Choice is an ASX listed company that seeks to help Australians with all of their financial needs.
Established in 1992, Mortgage Choice was originally established to help Australians improve their financial situation by offering a choice of home loan providers, coupled with the expert advice of a mortgage professional.
Since that time, the company has grown and developed into a fully fledged financial services provider.
Today, Mortgage Choice helps customers source car loans, personal loans, credit cards, commercial loans, asset finance, deposit bonds, and risk and general insurance.
Further, the company offers Australians access to real, relevant and affordable financial advice through our qualified financial advisers.
Mortgage Choice has no balance sheet or funding risk, and consistently delivers strong profits and attractive yields. It listed on the ASX in 2004 (MOC) and is a member of the Mortgage & Finance Association of Australia (MFAA).
Mortgage Choice holds an Australian Credit Licence: no. 382869 and Mortgage Choice Financial Planning Pty Limited holds an Australian Financial Services Licence: no. 422854. Both licences are issued by ASIC.
Recent recognition: 2014 Australian Broking Awards Best Diversification Program; 2013, 2012, 2011 Australian Broking Awards Major Brokerage of the Year – Franchise; 2013, 2012 Australian Broking Awards Best Ethical/Social Responsibility Program; 2012 Australian Broking Awards Best Training and Education; No.1 on The Adviser magazine’s 2012, 2011, 2010 and 2009 Top 25 Brokerages list; 2012, 2010, 2009, 2008, 2006 and 2005 MFAA Awards Retail Aggregator/Originator of the Year; 2011, 2010, 2009 and 2008 10 Thousand FEET Top 10 Franchise list; 2010 Forbes Asia-Pacific Best Under A Billion list.
Visit www.mortgagechoice.com.au or call customer service on 13 77 62.
