5 ways to pay off your mortgage faster and save

Imagine how good it would feel to pay off your home loan – no more worries about rate hikes, just plenty of extra cash.

Imagine how good it would feel to pay off your home loan – no more worries about rate hikes, just plenty of extra cash.

It can be done, and our five steps explain how to clear your home loan in super-fast time.

Step 1 Check you're paying a competitive rate

If your home loan lender charges a high rate, you're behind the eight-ball from the beginning. With plenty of loans costing below 4.0% p.a., talk to your Mortgage Choice broker about a home loan health check to be sure your loan is still competitive.

Step 2 Pay a bit extra

One of the quickest (and easiest) ways to pay off your home loan sooner is to pay a little extra off your loan every week, fortnight or month.

Simple habits like rounding up your monthly repayments to the nearest $10, from say $1,490 to $1,500, can be a budget-friendly way to make additional repayments.

Step 3 Pay fortnightly

Consider paying your loan fortnightly instead of monthly. There are 26 fortnights in a year so paying half your monthly repayment every two weeks instead of once per month means you'll make the equivalent of an extra month's repayment annually. It's a simple way to get ahead with your loan.

Check out our online Fortnightly Repayments calculator to see how much you could save.

Step 4 Put lump sums to work

Paying occasional lump sums of cash like your tax refund or annual salary bonus into your home loan can make a significant difference to your loan balance – especially if you make it an annual habit.

Not convinced? Use our Lump Sum Payments calculator to understand just how much more bang for your buck a lump sum can offer when it's used to pay down your mortgage.

Step 5 Get smart about spare cash

Got some spare cash? Why deposit it into a savings account paying 2% p.a. interest when you could use the money to pay down a home loan costing 4% p.a. or more?

Make your money work a lot harder with an offset account that helps you save on loan interest while giving you at-call access to your savings. Your Mortgage Choice broker can explain more about the pluses of an offset account and whether it is right for your needs.

For more clever ideas on how to become mortgage-free sooner and make better use of your money, contact Mortgage Choice. Our team of brokers and financial planners can provide tailored strategies to help you achieve your goals.

You might also be interested in:

Posted in: Home loans