Getting approved for your home loan your home loan is a great feeling. The initial phases of the process may be a little daunting, but opening the doors of your dream home knowing your finances are completely sorted is a great reason to celebrate .
To stay on top of your repayment plan, there are a number of free tools available which can help you get ahead on your mortgage.
1. Repayment calculators
Using a mortgage calculator before you take out your home loan can give an accurate idea of how much you can afford to pay back each month. However, few people consistently recalculate across the lifetime of their home loan, as their situations change.
Particularly if your financial situation improves, you may be able to get ahead on your payments by making additional repayments to help pay your loan off sooner.
If you have an offset account or a redraw option on your mortgage, the savings can be significant when you add up how much you save on interest just by being in advance of your repayments. Our offset calculator helps you calculate the impact offsetting some of your interest will make over time.
2. Mobile Apps
Smartphones are a necessity for the vast majority of people. There is a whole host of digital offerings that can help with working out ways to pay off your home loan more efficiently.
In fact, there are apps aimed at making the process of paying off a mortgage that much simpler such as mortgage calculators, as well as extra repayments calculators, budgeting tools and expense trackers.
One of the advantages of using any mobile app is it can send you notifications when your payments are due, or even just remind you to regularly recalculate the amount of money you can afford to pay back at any one time.
3. More frequent payments
One way to better pay off your mortgage is simply to be more mindful, and constantly assess the terms, amount and frequency of any payments. The benefits of doing this can actually be significant from a savings point of view.
Making one or two extra repayments will get you closer to being debt-free.
It may sound challenging, but it is manageable if you get paid fortnightly - equating to 26 paychecks a year - or if you're expecting a hefty bonus at any point.
$350,000 over a 30 year term at 2.63%. Monthly Repayment $1406.70
Monthly Repayments 12 x $1406.70 = 16,880.40
Fortnightly Repayments 26 x 703.35 = $18,287.10
Weekly Repayments 52 x $351.68 = $18,287.10
In the above example, just by splitting your monthly repayment amount into weekly or fortnightly installments you can make a difference in just 1 year, doing this from the outset of your loan can make a significant impact over the term of your loan.
If you have a long-term goal of being debt-free as soon as possible, then making one, two or several extra repayments over the course of the year will get you closer to that aim, and in less time, too. In essence, any extra principal payments are like long-term investments that accrue interest at the same rate as your home loan.
4. Document, plan and use spreadsheets
The need to reassess your mortgage will likely present itself if you're paying a variable interest rate. While the rates themselves may be out of your hands, there are certain steps to take to ensure your disposable income stays at a similar level.
An effective tool over the long term can be the humble spreadsheet. Now, this doesn't mean that you need to go and buy the latest and greatest in mortgage reporting software. In fact, you can actually put together a defined plan of action and do some of the tricky calculations using Microsoft Excel or even Google Sheets.
Mortgages can be tricky to manage but there are certainly advantages to getting ahead.
Where possible, try to consistently assess the amount and frequency of your payments if you're looking to unlock the most value over the entire course of your mortgage.
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