Are you looking to pay off your mortgage sooner? Here are some tips that should help.
Anyone who has ever had a mortgage will tell you they would love to have it paid off sooner and live comfortably without the worry of a mortgage over their head.
Considering this, most people continue to go by there business without giving too much thought as to how they could pay off their mortgage sooner.
For those who are interested in getting ahead on their mortgage, with the goal of shaving years from their loan term, check out the following tips.
- Align your mortgage payments with your income If you get paid fortnightly, set up your mortgage payment fortnightly also. By doing this it not only makes budgeting easier but it also cuts down on interest payable and will save you a lot of money over the course of your home loan
- Deposit cash in your mortgage account Consider depositing any savings or excess cash such as a tax refund, work bonus, dividends sale proceeds from other investments, in your mortgage. These lump sum payments can save you thousands on your home loan.
- Offset your loan with a savings or transaction account An offset account is a transaction account that reduces the amount you pay in interest on your home loan. If you have a $400,000 loan and $100,000 in savings, your bank or lender only charges interest on the difference being $300,000. The more you save on your offset, the less interest you have to pay. This can shave years off the life of your mortgage.
- Increase your repayments while interest rates are low As at June 2016, the RBA cash rate is 1.75 which is a record low, most lenders are offering very low interest rates as a result. Use this to your advantage by keeping your mortgage repayments at the same level as what you were paying before the decrease. This allows you to contribute more towards paying off your principle balance and your interest payable reduces as you owe less.
- Have your wages paid into your offset. Interest on your home loan is generally calculated daily and charged monthly therefore it is a good idea to have your salary paid directly into your offset account as you’ll begin to reduce the interest on your mortgage from the day any funds credit your account.
- Perform a mortgage health check Circumstance change both for you and for the banks. Given this, what may have been suitable for you originally may not be the case now. Your home loan may have been superseded as a product, or interest rates may have changed drastically. If you aren’t sure if you are still getting a good deal with your existing lender, speak to one of the Seek Financial mortgage brokers for a no obligation health check.
The above information is general in nature. It has been prepared without taking into account your objectives, financial situation or needs.
Before acting on this information you should consider the appropriateness, having regards to your own objectives, financial situation and needs before making any decisions. “Click here to view the full disclaimer”.