7 ways to pay off your home loan fast!
I’m sure everyone would love to get their mortgage off their backs as soon as possible. But how do you pay off your home loan quicker? I’ve compiled seven of my best tips to help you.
1. Increase your repayment amounts
The simplest way to pay off your home loan sooner is to increase the amount you repay each month. If you repay more than the minimum you will cut the overall term of your loan and save potentially thousands of dollars in interest.
And the more you pay off earlier on in your mortgage, the more you’ll save over time.
But be careful when paying off your loan in advance because some loan products may charge you an early payment fee! To avoid any hidden costs like these always check with your mortgage broker before increasing your repayments to pay off your loan early.
2. Consider how mortgage features can help
Think about how using an offset account or a credit card linked to your home loan might help you keep your loan balance low. If you’re looking for ways to keep your interest down, it’s worth investigating what other features your home loan comes with. If you aren’t sure just ask your mortgage broker who will explain it to you.
3. Take advantage if there are variable rate cuts
A lower interest rate will reduce your repayments. If your lender reduces the interest rate consider leaving your repayments as they were which means you are now repaying more than you have to. This can help you save on future interest payments.
4. Don’t pay the interest-only
An interest-only loan might mean you’re able to make lower repayments for the first few years. However, this also means that your repayments will be larger when it’s time to pay off the principal. If you want to pay off your mortgage as quickly as possible, an interest-only loan may not be right for you.
5. Consider refinancing
If you’ve had your mortgage for 12 months or more, refinancing might be able to get you a better deal on your home loan. There may be costs associated with refinancing and it’s important to take this into account. If you haven’t reviewed your mortgage in the last two years I would highly recommend asking your mortgage broker about refinancing. It could save you thousands of dollars. To learn more about refinancing you can read this short article about why you should consider refinancing your home loan.
6. Consider split loans
A split loan allows borrowers to divide their mortgage into both variable and fixed components. This will allow you to lock in a low fixed rate on part of your loan if you only want to limit exposure to the variable rate. This way you can get the best of both worlds and pay off the variable component of your mortgage quicker.
6. Explore your options
Before you sign on the dotted line, make sure you’ve explored all of your options. It’s worth looking into whether you can get a discounted loan rate with a financial package that includes special rates on other products and services. If you choose the right loan product, you can significantly reduce the length of your mortgage and potentially save thousands of dollars in the process. The current lending climate is very competitive with lenders offering many different products in the hopes to attract borrowers.
But with so many options, which is the right one for you?
That’s where I come in.
As your mortgage broker, I’ll find you a loan that suits your individual financial circumstances and will put you in the best possible financial position.
If you’re interested in paying off your home loan sooner and want to know what your options are, give us a call on (02) 5317 5114 or send us an email at barry@smsloans.com.au and we’d love to help you out!