Pay off your home loan sooner. You can do it, it will make you and your family very happy!
Here are a few tips that will become the fundamental ingredients that you can apply over and over again.
It’s not difficult, it just takes a little time.
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Work out a budget and stick to it!
Get to know what your living costs are, and budget for the things you want to buy.
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Make weekly or fortnightly repayments.
Your interest is calculated daily. By paying everyweek or fortnight you are not letting the interest accumulate for a full month before paying it. This can not only save you interest, but it will also reduce your home loan.
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Make your salary work for you.
It may be in your interests to have your salary paid directly into your home loan account and redraw your living costs as and when you need them. Your principal and interests get paid before anything else and your savings can actively reduce your home loan. Speak to your mortgage broker to help explain this further to make sure it is the right strategy for you.
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Make lump sum payments when possible.
Try to contribute tax returns, cash gifts, inheritances or anything else you can to your home loan. You will be surprised at the huge difference this can make to your home loan balance. -
Pay just a little bit extra.
If you can, pay a small amount extra with each repayment even if it is only $10, also your income will no doubt increase during the course of your home loan. When this happens allocate a percentage of your increase to your loan repayment. Again this will save you a lot of money over time.
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Keep a keen eye on short term debt.
Credit card and store card interest is much higher than the interest you pay on your home loan. If you like to use a credit card, choose one that gives you an interest free period, and be sure you pay the debt in full every month.
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Get rid of expensive debt.
If you do have credit card or store card debt that you cannot pay out, speak to your mortgage broker about using the equity in your home to drastically reduce your interest costs. A note of caution here, try to make more than the minimum repayment. Although the interest rate is less, it is over a longer period, so if you allow it to continue it may eventually cost you more. If you are finding your finances are in trouble, have a look at this article.
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Get regular home loan health checks.
It is important to get your mortgage broker to review your home loan as your circumstances change. The home loan industry is very competitive, and lenders are continually updating and changing products. Make sure you have the loan that best suits your needs.
