Top Tips on Paying Off Your Mortgage Faster
Without a doubt, for many Aussies, a home loan accounts for the most considerable investment. It figures that many are looking for useful tips on decreasing the debt and paying the mortgage faster than anticipated. So, if you’re still thinking about how to pay your mortgage faster, keep on reading to find out!
Make Frequent Payments
Typically, the most obvious and simplest strategies in life are the most useful. So, the most straightforward answer to how to pay your mortgage faster is to increase the frequency of your payments.
This is a simple, yet effective practice that actually reduces the overall cost of the loan. As opposed to making payments on a monthly basis, we recommend you to make them on fortnights. Is that useful, you might ask? Allow us to explain.
Divide the total monthly payment amount in two, and pay fortnightly. You won’t feel this as a burden, from a financial mindset, but it could make the world of a difference if we were to consider the long-term scenario. To put it roughly, a year consists of 26 fortnights but only 12 months. So, choosing this strategy means you’ll make 13 payments per year, as opposed to 12.
Choose a Combination Loan
How to pay your mortgage faster when you’re worried about interest rates’ growth, and you still don’t wish to settle with a fixed loan? A decent compromise would be to choose a split loan, which is also referred to as combination loan. Typically, that would enable you to dodge the consequences of interest rate growth.
In the case in which this happens, you can rest assured that part of your loan is fixed. Nonetheless, in the event in which that doesn’t occur, you can benefit from the flexibility of the variable feature of the loan, hence, pay off the loan more quickly.
Choose a Lender with a Lower Rate
Many Aussies struggle with this question: how to pay your mortgage faster when you’re stuck with a fixed loan solution? Although that seemed to be a decent choice at the time, you’ve had a change of mind. In this situation, choosing another lender with a lower rate can equal a significant difference of thousands of dollars.
That is because the mortgage market is competitive, and lenders continually provide more enticing and convenient offers. So, always keep yourself informed regarding this matter and you’ll be good to go.
So, if you have a loan that has it all (not from a positive viewpoint) and you wish to get out, you can. Still, before taking the leap, you should consider the costs of switching lenders. There might be extra fees you ought to pay for closing your current loan and other additional fees for choosing a new deal. Make all the necessary calculations, and if they make sense, go for it.
We hope that our tips on how to pay your mortgage faster have been helpful. Remember, whenever you’re uncertain of the path you should take, you can always discuss with a financial specialist, whose insightful guidelines and experience could be precious.