Article written by Sarah Thomas from Loan Market
Anyone who has ever had a mortgage will most likely tell you that they wish to have it paid off before the end of the loan term.
For many of us it can be easy ‘to fall asleep’ on our home loan as we continue to automatically make the mortgage repayments without giving it a second thought. However, making extra payments could see you cut years off your loan. We look at ways to help you get ahead;
Pay more than required
If you’re wanting to make a serious dent in your mortgage, make regular additional payments. You can do this by increasing the frequency of your repayments, increasing the repayment amount and contributing lump sum amounts, whenever possible.
Your situation may change as time goes on, if your income increases, also increase your repayments, accordingly.
Offset your loan with a savings account
Having an offset account is another way to cut down on monthly interest costs. This is where you earn interest on the amount in your savings account which is offset against the balance of your home loan. Example: if the amount of your home loan is $400,000 and you have $100,000 in your offset account, you will only pay interest on $300,000, rather than the full $400,000.
Run a health check on your loan
Ultimately, the most effective and quickest way to see the back of your mortgage is to make more payments, more often. But reviewing your home loan every so often, can help ensure you’re getting the lowest interest rate possible. If this is not the case, refinancing could be the solution. A mortgage adviser can take you through the different options available to pay off your home loan, quicker.
Call us if you are thinking about buying or selling or know of someone that is
Ray White Drysdale 03 5251 5880