Would You Like To Clear Your Mortgage Sooner?
Paying off a mortgage is without doubt one of the biggest priorities many home owners face. To reach that day when you actually “own” your home is a day many dream off and there are various ways you can reach that day sooner……
1. NEGOTIATE THE BEST INTEREST RATE
Interest rates are at a record low at the moment which creates a great oportunity for homeowners to negociate reduced rates with lenders. Competition between the lenders is fierce, so remember to look beyond the major players to find the right product.
When we have approached a clients’ lender regarding a refinancing of their loan, it never fails to surprise them how much they can actually save on their repayments with even just a small rate reduction.
For example, on a $300,000 25 year loan at 5.9%, a reduction of just 1% can save the home owner over $50,000 over the life of the loan.
If you currently pay your home loan monthly, consider changing to fortnightly or weekly. Doing this can make a significant difference to the length of yuor loan. For example, using the above example with an interest rate of 4.9%, switching to fortnightly payments would reap savings of over $30,000 in interest and three and a half years!
Similarly, rather than increase the frequency of payments, you could opt to increase the amount you pay monthly. A simple way to do this is simply to keep your repayments at the current amount, even if the rate drops.
Many mortgages are still taken out with the conventional period of 25 or 30 years. However, it’s entirely possible to request a shorter term loan.
This is a great strategy perticularly if you have a decent deposit or know that you can comfortably afford potential future rate rises as it can reduce your home loan by many years and save you $$$s.
Not all home loans will be flexible enough to allow these possible scenarios so you should discuss your requirements with your mortgage broker who can negociate with your lender on your behalf. But there are significant savings to be made so it’s always worthwhile exploring your options.
Comparison Rate calculated on a secured loan amount of $150,000 for a term of 25 years. WARNING: This Comparison Rate is true only for the example given and may not include all fees and charges. Different terms, fees and other loan amounts might result in a different Comparison Rate. Fees and Charges Apply. Terms and Conditions are available on request.