November 27, 2014 by Kristine Wood
Make a greater dent in your home loan…..
As we rapidly approach Christmas, one of our more expensive times of year, wouldn’t it be great to know that you are making a greater dent in your mortgage?
Check out our 5 recommendations for paying off your home loan quicker….
Make your mortgage payments more regularly.
Changing from monthly to fortnightly payments means you will make an additional payment over the course of the year. For a $250,000 loan at 7.5% fixed interest, paying fortnightly can knock 4 years and nine months of your repayment time and save over $67,000.
Pay more than the minimum amount required.
Paying more than you have to can actually make significant inroads on your loan amount over the course of the life of the loan. “Money Mummy” suggests that rounding up payments even by $6 can reduce your loan by two payments in total.
Use a 100% offset account to help you pay off your home loan.
An offset account is a transaction account linked to your home loan mortgage. The positive balance of your account is offset daily against the money you owe on your home loan in order to reduce the amount of interest you have to pay on your home loan. This can literally reduce your home loan term by years. The key is to make sure there is as much money as you can in the account to reduce the interest charged on your loan. You don’t need to have a fortune in there…Even $2000 can make a difference. Importantly though, you must reduce the temptation to spend the money in the transactional account as this will negate all the benefits of offsetting it against the loan.
Make bulk payments additional when you can
Tax returns, gifts, bonuses – If you can manage to make a yearly extra payment on your home loan it can help significantly in the long term to reduce the life of the loan. $500 a year as an extra lump sum payment on a $400k loan can reduce your loan by over two months.
Have a regular home loan health check.
Lending products change all the time and there may now be a better product out there for you. Mark or Herman from Mortgage choice are home loan experts and will investigate whether you are better suited to another type of home loan.
Call us at Mortgage Choice on (08) 92871030 for an appointment with Mark or Herman. We want to help you to meet your financial goals. Aswell as home loans we can also assist with car, commercial and equipment loans and also superannuation consolidation and disability insurance. We can meet you at a place and time that suits you.
