Can you imagine how amazing it would feel to finally pay off your home loan? Not having to worry about rate hikes and changes to products – just extra cash for you to enjoy.
Well, you can do it – with our 5 steps that will help you pay off your home loan quicker. Go on, have a scroll and read our 5 steps below.
Step 1 – Make sure you have a competitive home loan rate
If you are paying a high interest rate on your home loan, then you’re already getting started on the wrong foot. Currently, there are plenty of loans below 4% p.a. on the market, so you should chat to your mortgage broker about a home loan health check to ensure your loan is still competitive.
Step 2 – Pay a little extra on your home loan
One of the fastest (and simplest) ways to pay off your mortgage quicker is to pay a bit extra off your loan every month, fortnight or even week.
Developing habits such as simply rounding up your monthly repayments to the nearest $10 - from say $1,390 to $1,400 – can be a great way to make extra repayments that won’t break the budget.
Step 3 – Make your payments fortnightly
Paying your loan repayments fortnightly rather than monthly is a simple way to get ahead with your home loan. Since there are 26 fortnights in a year, by paying half of your monthly repayment every two weeks rather than once per month, you’ll make the equivalent of an additional month’s repayment annually.
Click to see how much you could save by paying fortnightly with our online Fortnightly Repayments calculator.
Step 4 – Put lump sum payments into your loan
When the opportunity arises, paying an occasional lump sum of cash such as your tax refund or salary bonus into your mortgage can make a big difference to the balance of your loan – particularly if you can make it an yearly habit.
But don’t take our word for it. Take a look at our Lump Sum Payments calculator to work out what a lump sum payment can do for your loan balance.
Step 5 – Use your spare cash wisely
If you come across some spare cash – why put it into a savings account that pays 2% p.a. interest when you could put the money towards your home loan which is costing you 4% p.a. or more?
In addition, you could make your money work much harder for you with an offset account, that helps you to save on interest while giving you access to your savings. As your mortgage broker, we can help explain more of the benefits of using an offset account and whether it is right for you.
If you’d like more tips on how you can become mortgage-free faster, give our team at Mortgage Choice Perth a call on (08) 9485 0090.
Click here to use more of our loan calculators