Since the 1st of July 2011, banks are no longer able to penalise a mortgage holder for switching new home and residential investment home finance, with home loan exit fees abolished, it’s now easier for people to shop around for a better deal on their mortgage repayments. Combine that with some canny planning plus some careful saving, and your dream of being mortgage free could come sooner than you expected.
Do your homework.
First step – your existing mortgage, we can help you to compare your mortgage to what’s on the market, if you find a more competitive mortgage and your home loan was taken out before the 1st of July 2011, there could still be numerous exit and set-up charges. So have a chat to us about taking everything into consideration before making the switch.
In fact, you might find that by sticking with your current loan and making a few changes, you can make a big difference to the term of your current mortgage and make your mortgage repayments work harder for you.
For example, it could just be a matter of paying fortnightly instead of monthly. On a $300,000 mortgage, you can cut 4 ½ years off the life of a loan, saving almost $83,000, just by paying fortnightly. Lump sum repayments can also chip away at your mortgage – tax returns, bonuses or inheritances can reduce interest on your mortgage.
Keeping your savings in an offset account can also work to reduce the interest on your loan. It all adds up.
Consolidate your debts into your home loan and prepare a monthly budget.
How much interest are you paying on other personal loans and credit cards? Rolling all of your loans into your home loan might greatly reduce your monthly repayments, and give you extra cash to make additional repayments off your mortgage.
Many people actually don’t have any idea how much they spend per month. It can often be a nasty surprise – if their outgoings exceed their income, it means they’re living off debt.
A simple plan – cutting down on eating out, takeaway meals or coffees, or paying an extra $20 per fortnight off your mortgage can make a significant difference. So with very little effort, you could be much better off.
No matter what your home loan situation, there is no doubt a strategy that can be put in place to help pay it off sooner. If you’re not sure where to start, we can help – give us a call now.