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Pay your mortgage off faster
Marty McDonald - Wednesday, January 31, 2018
Wouldn’t it be nice to not have a home loan! Read on for Marty’s tips on how to get your mortgage repaid faster.
Commit to higher repayments with the +2% pa trickFast track your mortgage by committing to higher than minimum repayments. If your loan is at an interest rate of 4% pa work out what repayments would be at 2% pa more i.e. 6% pa in this case and increase your repayments to this amount. On a $500,000 home loan over 25 years this would save you $86,500 in interest and you would pay off your home almost 7 years ahead of schedule.
Everyday Round-upSome everyday spending accounts offer an option to round up your tap and go purchases to the nearest $1 or $5. They then put the difference between that and the purchase price into a separate dedicated savings or investment account. Every few months you could transfer these forced savings directly into your home loan.
Some people may also find it useful to split their loan into 2 separate accounts with a focus on repaying one of the splits as fast as possible. One loan could be a low rate inflexible fixed rate and the other a variable rate with offset that allows unlimited extra repayments.
Don’t extend the term when you refinance
When you refinance do not re-extend your loan term. If you originally took a 30-year loan many years ago and you are now refinancing to a better interest rate be sure not to make the term 30 years again.
Refinance to a better interest rate
One of the most obvious ways to pay off your home sooner is to get a cheaper home loan. Refinancing to get a better deal can save you thousands of dollars and many years.
About the Author: Marty McDonald is principal of mortgage broker “Mortgage Experts”. Marty specialises in assisting active property investors with loan structuring advice and implementation as well as helping credit worthy borrowers with slightly outside the box income and employment situations. Find Marty on Facebook and LinkedIn.