Organise a budget and have a plan
If you don’t know where you are going, how do you know when you get there? It’s fine to throw a few extra dollars into your mortgage each month, but it is much easier to motivate yourself when you have some goals. If you want your mortgage paid off in 15 years, work out your repayments based on a 15 year loan term.
Consolidate your debts
One of the best ways of ensuring you continue to pay off your loan quickly is to protect yourself against interest rate rises. If your home loan rate starts to rise, you can be absolutely positive about one thing – your personal loan rate will rise and so will your credit card rate and any hire purchase rate you may happen to have. This is not a good thing as the interest rates on your credit cards and personal loans are much higher than the interest rate on your home loan. Many lenders will allow you to consolidate – re-finance – all of your debt under the umbrella of your home loan. This means that instead of paying 15 to 20 per cent on your credit card or personal loan, you can transfer these debts to your home loan and pay it off at 7.07 per cent. As always, any extra repayments or lump sums will benefit you in the long run.
Health check your home loan annually
Engage a Mortgage Broker who has access to a variety of banks and lenders.
Make extra ‘big’ lump sum repayments
When you can, i.e. at tax time if you receive a large tax refund. A lump sum payment of $5,000 made in the first year of a $400,000 loan can save over $15,000 across the life of the loan. Pay more now to save more in the future. Click here to use our Extra Payments Calculator.
Check your loan statements regularly
Human error exists everywhere, occasionally the banks do make mistakes.
Ensure you have an offset account
Gone are the days where a basic loan is cheaper than an offset loan. Having an offset account will save you money. Let’s say your net income is $60,000 / year. If you get your net wages of $5,000 / month and sit this in your offset account linked to your loan, you will save more than $20 / month. Compound this over 30 years and the savings are in the thousands.
Use a 55 day interest free credit card with your loan
Let’s assume you spend $2,000 per month to live, by putting these payments through a 55 day interest free credit card, it allows you to hold that $2,000 on your home loan during that 55 day period, and you will save thousands in interest on your loan.
If home loan rates fall, keep paying the same mortgage repayments
When interest rates fall, it can be hard to resist dropping your mortgage repayments too. But you’ll save money – by reducing the amount of interest you pay – if you keep them at existing levels.
Add $50 extra to your regular repayments
It might not seem like a lot but you will save $thousands in interest over the life of the loan. Click here to use our Extra Repayments Calculator.
Refinance (change lenders) if you can save money
Refinance to a lender that will give you a better deal and save you thousands. Loyalty and banks are a thing of the past. Saving you money must be your priority. Request a call today