Having a mortgage can be stressful, particularly with the threat of rate rises. Management and effective strategies can slash your home loan term virtually in half. A lot of people choose to pay the mortgage as intended without giving much thought to having a strategy to pay it off faster.
So if you are looking to pay off your mortgage as fast as possible, follow these tips.
1. Make payments at the same time as your wage
Align your payments with your wage. For example, if you receive your salary fortnightly then you should try to pay your mortgage fortnightly as well. This will save you money as this decreases your interest payable over your mortgage period.
2. Use the extra money to deposit in mortgage account
Try to put any extra money that you have in your mortgage, these will cut down the interest off the loan period. For example, you can use your tax refund, profits from any other investment or work bonus.
3. Repay more when the rates are stable
Decrease your loan period by two years just paying $20-$50 extra on each mortgage payment. For example, in the past there was a rate cut of 0.25% on Melbourne Cup day. Take advantage of this kind of situation. Keep your payment amounts the way they are even if the rates decrease.
4. Turn your Offset Account into your Savings Account.
Instead of earning interest, save interest off your mortgage instead, but putting your savings into a 100% offset account. For example, if you have a loan of $700,000 and you have $200,000 in savings, then you would only be paying mortgage interest on $500,000. This is a great way to reduce the interest and also reduce time on your loan repayment period.
5. Get your wages into your offset
As interest is debited at the end of the month and mostly calculated daily, you can take advantage of that and let your wages sit on your saving account for few extra days so that you can save money by reducing the interest of your mortgage.
6. Check your mortgage and the market
Some people may find that their loans are not suitable anymore, or interest rate may have changed drastically. In such cases, re-financing can be a good solution either with your existing lender or a different one. Speak to a Finance Strategist to help you with this. Usually, their services are free, and the right finance strategist can save you thousands, as well as set you up to make more profits. We have experienced Finance Strategists and we have a good understanding of people who what to invest, create profits and pay off their debts.