The faster you’re able to pay off your mortgage the more money you’re saving on interest in the long run.
Any chance you have to improve your mortgage or pay down your principal will allow you to fast track the repayments process. However, the most important elements are always increasing repayments and decreasing spending. Here are some ways to help pay off your mortgage sooner.
Offset account
Many loan products come with an offset account, and this is a great way to help save on interest. If you’re able to have your income or spare cash put into an offset account, it will effectively save you on interest.
Lower interest rate
One of the most obvious ways to save money is to pay less interest. In today’s competitive lending environment, it’s well worth talking to your mortgage broker and comparing loan options to see if it’s possible to find a lower interest rate.
Flexibility
If you’re trying to get ahead on your loan by making additional repayments, you need to be sure your loan product has the flexibility to allow that to happen. Some products, such as fixed rate loans, might not allow you to make additional repayments without a penalty. It’s important to discuss your needs with your broker before you take out a loan so you can find a product that matches your goals.
Pay off in lump sums
If you’re fortunate enough to receive a bonus, a nice windfall, or an inheritance, it could be well worth paying that off your mortgage. When you reduce your principal component, your interest also drops. This means you will be able to continue to make the same level of repayment as normal, but still pay down the loan faster.
Right features
When you’re first looking at your loan options it’s vital that you get the right features for your needs. There are a host of different products and packages available, but some of these come with added costs and fees. Only add on what you need, which will let you put any savings towards paying off your principal if you desire.
Increase your repayment frequency
The more often you’re able to make your repayments the faster you’ll end up paying down your home loan. Paying fortnightly means you’re making 26 annual payments compared to 24 if you were paying on a monthly basis. These extra repayments, while seemingly small, will add up over the course of a 30-year mortgage.
