Tips to get ahead by Amanda Liszewski, Lending Specialist, Better Homes and Gardens Home Loans
Over the years I have worked as a mortgage broker, the question I get asked most often is ‘how can we pay off our mortgage faster?’.
There is no doubt the biggest purchase you will ever make in your life is your home. It is also the biggest debt you will most likely have. I could say the fastest way to pay off your mortgage is by getting the lowest interest rate, correctly using offset and redraw facilities (stay tuned for the next post, when we discuss this topic)! But, I know you’re not reading this to hear the obvious.
Here are two simple ways you can pay off your mortgage faster.
1. Refinance over a shorter period
I have been telling my clients that given the interest rates are currently so low, now is the best time to refinance, but…. Not for the standard term of 30 years! I believe it is best to refinance your loan over a shorter period of time, based on what your serviceability allows. By doing this you could be reducing not only the loan term but also, most importantly, the interest component over the life of the loan.
2. Review your repayment frequency
Also, another way I would suggest paying off your mortgage faster is to choose fortnightly repayment instead of monthly repayments. Since interest is calculated daily, the more frequently you make payments, the more you could save in interest over the life of your loan. Switching from monthly to fortnightly payments will save you money in the long run as you will be making an extra repayment each year. This is due to the fact that there are 26 fortnights in a year, not 24! This means that paying fortnightly could reduce the number of years it takes to pay off the loan. Do ensure you check with your lender to see how they calculate the fortnightly repayments to see if this will work for you.
Not sure your current home loan is right for you? At Better Homes and Gardens® Home Loans we are dedicated to finding the right finance solution for your individual circumstances. Through our expert advice, technology and guidance, we help you through every step of the process. To find out more about how we can help you find the right home loan for your needs, click here.
**The information provided constitutes information which is general in nature and has not taken into account any of your personal objectives, financial situation, or needs, please feel free to give our lending specialists a call to see how we can help you pay off your loan faster.
Disclaimer: The opinions posted within this blog are those of the writer and do not necessarily reflect the views of Better Homes and Gardens® Real Estate, others employed by Better Homes and Gardens® Real Estate or the organisations with which the network is affiliated. The author takes full responsibility for his opinions and does not hold Better Homes and Gardens® Real Estate or any third party responsible for anything in the posted content. The author freely admits that his views may not be the same as those of his colleagues, or third parties associated with the Better Homes and Gardens® Real Estate network.