It’s not uncommon for Australian’s to feel in over their heads when it comes to monthly mortgage repayments, eating up most of their hard earned income. There are solutions to getting ahead to pay off your mortgage sooner… here are our top tips:
1. Could you be making an extra months payment every year?
Structuring your payments differently could result in making an extra repayment! If you pay your repayments every month that is 12 payments per year however if you change your repayments to fortnightly that is 26 payments per year. So essentially by paying fortnightly you are paying an extra 2 payments a year. If you maintained a payment of half the monthly repayment, then you are squeezing an extra months payment into each year!
It may sound surprising, but paying this way can cut tens of thousands of dollars in interest off the loan.
2. Variable and fixed – the best of both worlds
Splitting your home loan between variable and fixed rates often provides borrowers with the solution of paying off more if they can. Having a variable portion gives freedom to make extra repayments without a penalty, while the fixed portion gives certainty about what repayments will be each week. Make sure you do weigh up the pros and cons of both fixed and variable rates before committing.
3. Having an Offset account
An offset account is a separate transaction account linked directly to the mortgage. It provides access to the funds it has available, however the balance on the account offsets the interest charged on the home loan. This is a great way to reduce the interest you are charged but of course, home owners should always seek independent financial advice regarding if an offset account is right for you.
4. Making the most of your tax return refund
Tax refunds can seem like a yearly windfall of several thousand dollars. By putting this towards your mortgage it could be a full extra repayment every year, paying off your mortgage sooner.
5. Look beyond the big banks
When it comes to finding the best loan, don't think there are only four options. Whether you are a first time borrower, investor or an existing customer of a big bank, it is worth exploring the different home loan options available on the market. It could be that the best product for you may be from a lender you haven't heard of before and that is where the services of Focus Property Wealth could come in handy!
Another Idea:
Deciding to put a dollar amount extra every month towards your mortgage it really adds up, even an extra $50 a month can go a long way! This extra monthly payment, especially in the beginning of your loan term, will really cut down on the high interest payments, it’s worth giving up a daily coffee for!
For more ways to reach mortgage freedom sooner call Focus Property Wealth on 6162 6577 or Contact Us for a complementary no obligation chat.