I am hoping many of you out there already know and understand the power of compounding and put a little extra into your loan to pay it down quicker.
If you combine paying extra off your loan along with making sure you are checking every couple of years whether you are on the sharpest interest rate that you can get, then the results can be amazing.
For those not 100% up to speed on this one, check out the below happy clients we looked after recently:
Mark & Jane purchased their home 2 years ago with a loan they got for $650,000.
Their rate was 5.2% pa over 30 years which meant they were paying $3,569 per month onto the loan.
By refinancing onto a lower rate (we managed to get these guys down to 4% pa), this reduced their repayments down to $3,103 per month.
As you can see, just by doing the refinance, over 30 years they have saved a massive $167,768 and paid less per month to do it!
But it doesn’t stop there, because we want all our customers to still have a life and not just be all about saving so after discussing with them on what they wanted to do in the next year, they said they wanted to go on a holiday down south and would need about $1,200 to go on it.
So the $466 they were saving each month ($3,569 less $3,103 in repayments) they took $200 of it each month and put it into a high interest savings account to get to the $1,200 by the end of the month to go down south on their week long holiday.
They could have spent that extra $266 they now had each month, but by putting that extra amount in as additional loan repayments, they will save a whopping extra $74,087 in interest costs and pay off their loan 4 years and 2 months sooner!
Moral of this story, don’t just set and forget your loan. Every 2 years make sure you check out what is available and what specials all the lenders have because you could be saving like Mark & Jane.
Of course, I am happy to help anyone who would like me to do a free review of their home and other loans to see if I can save you some money and time as well.
If you liked this blog or know of someone else who has a loan, please share this with them so they too can benefit from having extra money in their pocket each month.
About the Blogger
Brad Dunn has been a property investor, business owner, father and working in the finance industry for over 15 years.
He is currently one of the franchise managers of the multi-award winning South Perth Mortgage Choice office but what’s really important to him is that 9 out of 10 of their clients would recommend them to a friend.
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