Paying off your mortgage is a marathon, not a sprint. There’s certainly no urgent rush, but it might take you 20 or even 30 years to cross the finish line, so it’s in your best interest to pay it off a little quicker where possible.
To help you run the race to fully fledged home ownership just a little faster, we’ve whipped up four tips to speed up your mortgage repayments.
Refinance for better rates
It costs money to switch home loan providers, but in the long run it could definitely be worth it. Making sure that the fees, interest rates and charges are lower on your new loan is the essential first step to refinancing well.
Getting a little help from a local mortgage broker like us will ensure that your new loan is suitable and that refinancing is worth the trouble.
Don’t lower your repayments when rates fall
If your home loan’s interest rate suddenly drops a percentage or two (assuming you have a variable rate), it might be tempting to drop your repayments and pocket the rest. But in the grand scheme of things that might not be worth it.
Keeping your payments the same when interest drops will mean that you shave more off the principal of your loan. The savings that you get from the interest drop will go directly into building your equity and your wealth.
Make extra repayments
Never lock in the first offer of a home loan that you get.
Paying the bank more than you have to may feel counter-intuitive, but the fact is, it’s a better idea in the long run. Here’s an example – with a 5 per cent interest rate on a $500,000 loan, over a 25 year term, your looking at monthly repayments of $2,922.95.
If you can afford it, paying around $130 more a month will shorten your loan term by as much as two years!
Look for loans with less charges and fees
When refinancing, or choosing in the first place, we can help you shop around and weigh your options before finally choosing the most suitable home loan for you. This might mean you can find a home loan with lower fees and charges, saving money.
As we’ve discovered, the smallest differences in your home loan and your repayments can make all the difference.