Dreaming of paying your home loan off sooner? The day you make your last repayment might still be a long way off, but there are some simple things you can do in the meantime to save money on your mortgage. By keeping track of your spending, you might be surprised how much money you can save.
To help get you across the finish line sooner, here are my top three tips for saving money on your mortgage:
1. Set up an offset account
Offset accounts offer a number of benefits, with the main one being the savings you can make on interest payments. The way this works is that when an offset account is linked to your mortgage, the interest is calculated on the total amount owning, minus the funds in your offset account. These regular savings can really add up across the term of your loan.
For example, if you owed $200,000 on your mortgage and had $10,000 in your offset account, your interest would be calculated on a sum of $190,000. A great way to maximise the benefits of an offset account is to put the money you would have spent on interest into your loan and pay it off sooner.
2. Make extra repayments
The finance of home loans boils down to this: the more money you owe on your loan, the more interest you are charged. By regularly making extra repayments on your loan – no matter how small – you can save yourself a great deal in the long term. Use the Mortgage Choice home loan repayments calculator to see how much you could be saving.
Before you start making extra repayments, check that your loan allows you to do so. This is important because some home loans have stipulations about how much you can repay before fees are charged. If you are not sure whether this is the case for you, I can help you to examine the fine print of your mortgage.
3. Consider refinancing
By regularly comparing your loan to others that are now available on the market, you could find yourself a much better deal. Interest rates are currently at historically low levels and banks are offering highly competitive loans. By reviewing your mortgage alongside all of your other regular expenses, you may be able to work out a solution to pay off your mortgage sooner. I offer free home loan health checks, which can help you to determine whether a new loan will save you money.
0419 733 862
Your Garden City Mortgage Broker, Brisbane