Most home loans last for about 20 or 30 years which we’re sure most will agree is a very long time to commit to a loan. But you can pay your mortgage off faster by following a few very simple strategies.
Here are some tips that might help:
1. Pay your mortgage more frequently – If possible, make your mortgage payments weekly or fortnightly, as opposed to monthly. By doing this you will attract less interest and hence save money.
2. Pay more than you need to – If your mortgage is $1,000 a month then why not pay $1,200 instead? Even if you can put away a little bit extra each month, you can help pay off your mortgage faster, and help reduce the amount of interest you pay each month too.
3. Use an offset account – An offset account is an account that is connected to your mortgage and whatever value sits in it reduces your mortgage by that amount. Having an account like this can help you cut down your mortgage by hundreds of dollars a year by reducing the amount of interest you pay.
4. Make extra payments – If you have extra money, from a bonus or whatever else it may be, then consider paying this into your mortgage. Even if you can spare an extra $100 every now and again, it will add up over the long run and help you get ahead.
5. Don’t lower repayments if rates go down – When interest rates drop so will your minimum payments, but if you can afford the higher rate then why not keep paying it? You won’t even notice that you are paying more because you should be used to it and if rates go back up again you will already be used to paying the higher amount.
6. Refinance from time to time – It’s a good idea to step back and take a look at your mortgage every now and again. Over time the home loan industry changes and there might be a better deal around, or you might have paid off enough money that you can consolidate debts or even afford a new home. So take the time every year or so to get professional advice regarding your mortgage.