How to pay off your mortgage faster
A home loan is one of the biggest and often one of the longest commitments you will make in your life. Today I plan to explain ways that you can reduce the life of your loan, and pay your mortgage off quicker.
1. Make extra repayments – Making extra repayments on your home loan is extremely beneficial, as it will reduce the amount of money you owe and in turn the amount of interest you will pay on your home loan. Repayments on a home loan take into account both the interest accrued on the loan amount, and the original amount of money borrowed. Reducing the amount of money you owe means you are being charged less interest, which in turn helps you pay off your principal loan amount quicker.
Say for example, you have a $400,000 loan at an interest rate of 6.25%. If you decide to pay an extra $50 a week or $200 a month, you can save $104,000 and reduce the term of your loan by 5.5 years!
2. Make lump sum payments– If you’re able to make lump sum payments at any stage of your loan this will help reduce the amount you owe, and again help you pay off your mortgage quicker.
3. Make sure you are getting a good deal – You have to ensure that your lender is providing you with not only a good rate, but great customer service. Post settlement service is important, you want to make sure that your lender is looking after you and values your relationship.
It’s important that you try to remember the above three tips when you have a home loan. Whether you’re able to make regular extra repayments or irregular lump sum payments, the financial benefits involved with spending that extra money will be of considerable benefit for you and your home loan. It also pays to make sure you are getting a good deal from your lender, you shouldn’t settle for second best!
If you would like any extra information, or would like to find out how much you could save on one of our dream loan products, visit our website or call us on 13 10 90.
By Marie Mortimer. You can follow Marie on Google+
Image credit: nkzs