Tips for paying off your home loan, faster
Can't pay more? Pay more often
There are 12 months in a year, but did you realise there are 26 fortnights? If you divide your monthly loan repayment in two and make payments every fortnight, you'll make the equivalent of 13 monthly repayments every year - that's an extra month's repayment without feeling the pinch.
Make extra repayments
Even small amounts can make a major difference. If you buy two cups of coffee a day and you cut that down to just one, you could be saving around $15 a week that you could put towards your mortgage.
Add windfalls to the home loan
Lump sum payments like an end of year salary bonus or your annual tax refund can make a surprising impact on your loan. Make it an annual habit for even bigger savings.
Get a mortgage with an offset account
With these loans, all of your salary goes 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 and loan and your savings. Used carefully, this can get 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 not to be complacent about your home loan. Mortgages are constantly evolving, and an annual check up with the help of your mortgage broker can show if your loan is still the best choice for you.