A mortgage is likely the largest debt you’ll ever incur, potentially setting you back hundreds of thousands of dollars. When you consider multi-decade year loans, it may seem like paying it off is long in the future. However, there are a variety of strategies to help you pay it off quicker, which can save you a significant amount of money in the long-term.
Here are our 4 top tips for paying off your mortgage faster:
1. Consider refinancing your mortgage
Every year or so, it’s beneficial to review your home loan and determine whether your current lender is providing you with the best deal and interest rates. You can either renegotiate your current rates with your existing lender or make the switch to a new lender which provides a lower interest rate. This can lead to significant savings that if you didn’t refinance and continued paying higher rates each month, and this allows you to pay off your mortgage sooner.
2. Make more frequent repayments
Opt for fortnightly repayments rather than monthly ones if possible. Home loan interest is calculated on a daily basis, so when you make payments more frequently you’re actually decreasing your loan at a more rapid pace, which leads to less interest as well. Ultimately this results in being debt free quicker!
3. Pay extra with each repayment
While you’re technically only required to pay a calculated amount each month or fortnight, a great idea is to actually pay extra is possible, as this hastens your way towards the end of the loan. Automating your repayments is a simple, hassle-free way of doing this.
4. Use an offset account
This is a savings account that’s linked to your home loan account. When interest is being calculated, your offset account balance is factored in to reduce the amount owing. The more money you have in this savings account the better, and the outcome is that less interest is required to be paid, and it speeds up the process of paying off your loan.
Put these 4 strategies into action and you’ll be surprised at what a difference it can make! You’ll be well on your way to a mortgage-free life sooner than you might expect.