Anyone who has ever had a mortgage will confess to you how they would love to settle them before the loan term is up. Paying off a 30-year loan term is quite rightly a daunting task in every respect. Fortunately, there are ways in which you can slash it to almost half by adopting a proactive approach. A majority of borrowers chip away at their loan on autopilot without considering speeding up the repayment process. The following six tips will come in handy to those of you who shave a substantial chunk of years from their home loan terms:-

Match Your Mortgage Repayments To Your Income

The first tip of paying off your mortgage faster is aligning your mortgage repayments to your income streams. If you are paid on a weekly basis, repay your mortgage per week; if you are paid fortnightly, repay your mortgage after every two weeks, and so on. This will help you on the interest payable on your mortgage and hence help you save a lot over the entire loan term.

Increase Your Repayments While Rates Are Stable

RBA is currently maintaining low stable rates to borrowers. In the classic ‘make hay while the sun shines’ rationale, you can benefit from this current situation by increasing your mortgage repayments each month. You can increase these repayments by amounts as low as $20. This way, you stand to cut up to 2 years of the term of your mortgage.

Park Lump Sums In Your Mortgage Account

That’s right, go ahead and deposit the occasional lump sum payments such as a $1,500 tax refund, work bonus or dividends from other investments to your mortgage account. Lump sum payments will help you avoid years worth of interest.

Offset Your Loans With A Savings Account

Another tip is that of offsetting your loans with a savings account. In an ideal situation, your savings account will be earning the same interest as that applied on your mortgage. You can then offset your loans with a savings account and thereby only pay interest on the outstanding amount. For example, if your loan is $500,000 and your savings are $250,000; you will only pay mortgage interest on $250,000.

Have Your Wages Paid Into Your Offset

Letting you wages lie in you offset account for a few extra days per month will greatly reduce the cumulative interest you pay over the loan term. This is because the interest that is debited on your account at the end of every month is calculated daily and not monthly as many people presume. Having your wages paid into your offset can help you save a few hundred dollars annually.

Perform A Mortgage Health Check

Days go by and it may dawn upon you that your current mortgage is not the best one for you after all. You loan may have superseded as a product, interest rates may have changed suddenly and so on. Under such circumstances, it is imperative to perform a mortgage health check. Options such as refinancing with the same or different lenders may prove to be best for you after such periodic checks.

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