Are you looking for ways to save on your home loan? Following these simple tips will put you on the path to paying off your loan sooner or if your goal is to purchase an investment property, creating equity from which you can draw on.
Increase your repayment amounts
The simplest way to pay off your home loan sooner is to increase the amount you repay. By repaying more than the minimum you can cut the overall term of the loan and save thousands of dollars in interest. The more you pay off earlier on in your mortgage, the more you’ll save over time. Some products may charge you an early payment fee for paying your loan in advance. These costs can be large, so it’s best to always check beforehand.
Consider how mortgage features can help
Think about how using an offset account or a credit card linked to your home loan might help you keep your loan balance low. If you’re looking for ways to keep your interest down, it’s worth investigating what other features your mortgage comes with.
Take advantage if there are variable rate cuts
A lower interest rate will reduce your repayments, but if your lender reduces the interest rate, consider repaying more than the minimum loan repayment amount. This can help you save on future interest payments. Don’t pay the interest-only An interest-only loan might mean you’re able to make lower repayments for the first few years, but this means your repayments will be larger when it comes time to pay off the principal.
If you’ve had your mortgage for 12 months or more, re-financing might be able to get you a better deal on your home loan. There may be costs associated with re-financing and it’s important to take this into account.
Consider a split home loan
A split loan allows borrowers to divide their mortgage into both variable and fixed components. You can lock in a low fixed rate on part of your loan, if you only want to limit exposure to the variable rate.
Explore your options
Before you sign on the dotted line, make sure you’ve explored all of your options. It’s worth looking into whether you can get a discounted loan rate with a financial package that includes special rates on other products and services. With just a few easy steps, borrowers can significantly reduce the length of their loan and save thousands of dollars in the process.
If you’re interested in paying off your home loan sooner, contact your mortgage broker.