Your home is likely to be the biggest investment you’ll ever make and most of us would love to pay our home loan debt off as quickly as possible. At Elanora Realty, we’ve put together a list of tips that could help you pay your mortgage off sooner.
Make more frequent mortgage payments
One of the easiest strategies you can employ is to make your mortgage repayments more frequently. Many lenders default to monthly repayments but by paying your mortgage fortnightly you can effectively save thousands in interest over the lifetime of your home loan.
Set your repayments higher and make them automatic
Another great way to get ahead of your mortgage commitments is to pay off more than the minimum interest repayment. Aim to make payments against the principal as often as possible. When you pay off the principal, you save money on the interest, and you will be able to pay off your loan quicker.
Get a combination/split home loan
Get a combination or split home loan. This works as 2 mortgage accounts, 1 can be a fixed rate and the other a standard variable. The advantage of a fixed rate home loan is that you are not affected by rising interest rates. The drawback, however, that loan terms usually prohibit you from making extra repayments on your loan. The reverse is true of a variable rate mortgage. With a split loan, you can mitigate the risk of rising interest rates to some extent, while still making extra repayments against the principal loan amount.
Use a mortgage offset account
An offset account is linked to your mortgage, and any money in that account helps to offset the total owing. This may reduce your interest payments depending on the amount of money in your account. The benefit of this is that you can send your income directly to this account, and as interest is calculated daily it’s reduced from the moment your account is in credit.
Shop around for a better deal on your loan. Lower interest rates can save you thousands of dollars at the end of your loan. Do your research and don’t look past the smaller lenders who regularly offer better terms than the big banks. Sometimes even warning your current lender that you’re thinking of going elsewhere is enough to prompt them to give you a better rate! However, make sure you also find out the potential costs of switching, as there are often fees involved.
Now, with all that extra equity in your home, you could look at buying an investment property or upsizing to a larger home!
If you would like to discuss putting your property on the market, speak to Alex or Jason at Elanora Realty to arrange your free property appraisal now. Alternatively, you can download our free guide to selling your home for more tips on residential property sales.