Borrowers often get their mortgage in place and get busy with life again! However with just a few easy steps – and mortgage saving tips! you can significantly reduce the length of your mortgage and potentially save thousands of dollars in the process.
Here are some practical ways to do this.
Increase your repayment amounts
The simplest way to pay off your home loan sooner is to increase the amount you repay. By repaying more than the minimum you can cut the overall term of the loan and save thousands of dollars in interest. The more you pay off earlier on in your mortgage, the more you’ll save over time.
Some products may charge you an early payment fee for paying your loan in advance. These costs can be large, so it’s best to always check beforehand.
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.
Take advantage if there are variable rate cuts
A lower interest rate will reduce your repayments. However if your lender reduces the interest rate, consider repaying more than the minimum loan repayment amount. This can help you save on future interest payments.
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 means your repayments will be larger when it comes time to pay off the principal.
If you’ve had your mortgage for 12 months or more, re-financing might be able to get you a better deal on your home loan. There may be costs associated with re-financing and it’s important to take this into account.
Consider split loans
A split loan allows borrowers to divide their mortgage into both variable and fixed components. You can lock in a low fixed rate on part of your loan, if you only want to limit exposure to the variable rate.
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.
Access our e guides for more practical mortgage saving tips.
Anthony Landahl | Equilibria Finance | March 2017
Note: This is for general information purposes only and does not constitute advice. With all of these options there are a number of considerations outside the scope of what is covered in this article that you need to understand to ensure your personal circumstances are taken into consideration.