Australians owe nearly $34 billion in home loans as of January, Australian Bureau of Statistics data shows. Imagine how much we'd all save in interest repayments if we paid our loans off one year earlier!
The amount is astronomical, but on a more relatable scale by paying a $500,000 home loan off in 24 instead of 25 years you'll save close to $20,000 (assuming a 5 per cent interest rate). To help keep would-be interest payments in your pocket – here are three tips for paying your mortgage off quicker.
1. Go split
Interest rates go up and down, that's just a fact of life. Hedge your bets in an uncertain market by splitting your home loan – leaving half at a fixed rate and half variable. This means that you'll still be able to make extra repayments on the variable part of your loan, but you'll also be offered some protection against rising rates by the fixed portion.
As interest rates are at record lows right now, logic says they can only go up from here. Talk to a mortgage advisor that you trust to protect yourself against these changes and pay your loan off as quickly as possible.
2. Pay fortnightly, not monthly
Home buyers often fall into the trap of thinking every home loan is much the same.
There are 26 fortnights in a year and only 12 months. That means splitting your monthly payment into two and paying every fortnight instead will result in an extra month's payments every year. That extra amount could shave thousands off your interest repayments and help you pay your loan off years quicker.
Plus you'll barely notice the extra amount coming out of your disposable income if you've chosen the right home loan.
3. Find a loan tailored to you
Home buyers often fall into the trap of thinking every home loan is much the same, but this couldn't be further from the truth. While larger lenders may offer near identical off the shelf products to many of their customers, here at Advantage Finance we strive to tailor our finance products to your unique situation.
If paying your loan off early is your objective a mortgage tailored to your specific needs is a must. To find out more about how we can help you, get in touch with an expert mortgage advisor at Advantage Finance today.
