Owning your own home is the great Australian dream. Have you ever wondered how you can make that dream a reality by paying off your home loan faster?
Here are some tips and tricks that can help you do it, without compromising your current lifestyle.
1. Refinance to a better deal
Most mortgages are long-term commitments, and many people tend to forget about the terms, conditions and features of their loans over time. But that approach can be very costly in the long run.
The home loan industry is highly competitive. Even a small difference in the terms, conditions and features of your loan can have a significant impact on the amount you’ll pay over the life of your loan.
It pays to shop around and see if you can get a better deal. Lenders will often offer attractive deals to try and win your business.
It’s also a smart move to consolidate any other high-interest debts you might have (like car or personal loans) into the best low-interest home loan deal you can find.
2. Be smart about how you structure your repayments
Getting a great loan deal is only one part of the equation. You also need to structure your repayments as effectively to reduce your debt as quickly as possible. For example, you can make fortnightly instead of monthly repayments.
This simple change can make a big difference to the amount of interest you’ll pay and how long it will take you to pay off your home loan.
You simply halve your monthly repayment amount and pay that sum fortnightly instead. So, if your monthly mortgage repayment is $2,000, you arrange to pay $1,000 a fortnight instead. This will feel virtually the same.
But there are 26 fortnights a year, and only 12 months. So, over the course of a year, you’ll pay $26,000 off your loan using a fortnightly repayment method, instead of $24,000. That’s the equivalent of you making one extra month’s repayment each year without really feeling any financial pain at all.
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Have an offset account
An offset account allows you to offset the amount of interest you’re charged on your home loan. It does this by reducing your home loan balance by the amount you have in your savings account. For example, if you have $10,000 in an offset account and your mortgage balance is $300,000, you would only be charged interest on a balance of $290,000 (i.e. $300,000 less $10,000).
How we can help
At Maxima Group, helping people to own their own homes sooner is one of our specialist services. It’s never too early or too late to start implementing smart financial strategies to help you own your biggest financial asset as soon as possible.
Contact us for a free consultation to find out how we can help you!
We’ll take the time to understand your situation and provide you with the best possible advice.
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