1. Make extra repayments
This seems like the most obvious way to pay your loan off faster, but sometimes it can seem impossible if you already have fairly high mortgage payments. Try adding in just a little every time if you can, but you’ll need to check what repayments you can actually make with your mortgage as some loans have restrictions on extra repayments. You can also save a lot by making your repayments fortnightly instead of monthly to pay an additional month’s worth off your mortgage every year – add in that little bit extra you’re putting on top and you’ll be set!
2. Check out your options
When you have the option for a better rate, it’s usually a good idea to take advantage of it if it works for you. In order to make the most of a low rate and pay your mortgage off faster, make sure the new loan term also has some flexibility – that way, even though your payments may be lower now, you can continue paying the same as you always have to have a bit more cash going in!
3. Cut back on spending
Again, this is an obvious one but one that can actually end up being trickier than it sounds. Instead of going the whole hog and cutting out everything you love, try cutting down one thing at a time. Maybe try to reduce your cafe coffee to one a day, or bring leftovers for lunch more often. It can be easy to do this and then end up spending that money on something else, but if you actually put the money you’ve saved into another account straightaway to pay your mortgage, you’ll really see the difference.
4. Set up an offset account
An offset account allows you to have your salary or wages paid directly into your mortgage account to offset the amount of interest you need to pay. For example, if you have $50,000 as an outstanding balance in an offset account for your mortgage and $3,000 is deposited into that account from your wages, when the interest rate is calculated that day, you’ll only pay interest on $47,000 of the loan amount. If you can also get your repayment dates aligning with your income cycle, this will work out very well for you!
5. Review your loan regularly
Our circumstances might change but it’s unlikely that we’ll be thinking of how our mortgage can change with us. Make sure that you’re across what’s happening with the latest home loan deals and interest rates – you don’t need to change your loan every time the interest rates are lower, in fact that will likely end up costing you more overall because of break fees and other admin costs. When it comes time to refix or refinance, always check in with one of Haven’s fantastic mortgage advisers – not only can we sort you out with the best rates, we can also give you some great tips and set you up to pay your mortgage off faster. Get in touch with the team today!
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