There has been plenty of discussion recently about whether we have seen the last cuts to home loan interest rates, so now more than ever it’s important to understand how to effectively manage your mortgage.
With interest rates at their lowest levels for close to 40 years, the secret is to not sit back and enjoy the extra cash you might have at the end of each week, but rather to take advantage of a once in a generation opportunity to pay off your home loan sooner.
Here are a few simple repayment tips which will enable you to pay your loan off faster and save money.
Review your home loan
Banks, Building Societies and Non Bank lenders are now offering heavily discounted lending packages to win over your business.
Ensuring that your home loan still offers a competitive interest rate could save you thousands of dollars over the short, medium and longer term. However be sure to give us a call for advice on the most appropriate product for you and any fees or costs that are associated with switching before jumping ship.
Up your home loan repayments
Try to maintain your current payment level on a variable rate loan, even though your required repayments may have dropped due to falling interest rates. This will enable you to shave a portion off the principal of your loan.
Even something as simple as increasing the frequency of your payment by paying weekly or fortnightly can save you thousands of dollars of interest on your loan effectively reducing the term of your loan.
Make extra repayments on your home loan. By paying as little as an extra $10 per week on a $180,000 loan will reduce your loan term by nearly 2 years and save you up thousands in interest.
Take full advantage of the extra features available on your home loan, such as a 100% offset account. An offset account holding $10,000 linked to the average mortgage could save you thousands over the loan term and about 2 years off a 30 year term. As you can see it is hard to argue with numbers like these.
If your home loan doesn’t have facilities such as an Offset Account or weekly payments then maybe it’s time to discuss your options with a mortgage broker, someone who will be able to guide you through all the different loan product options that are available in today’s market.