The longer you take to pay off the principal amount you’ve borrowed for your home the more interest you will end up paying.<
However mortgage reduction is much easier and less painful than most people think, and as interest rates tumble there’s never been a better time to use the money saved on mortgage interest repayments to drive your mortgage down.
Keep the following points in mind as you strive to be fast track your mortgage repayments:
Review your home loan: Make sure that your home loan still has a competitive interest rate. Some lenders are heavily discounting their loans to win business so it’s well worth considering your options. Your broker will be able to help you explore whether there’s a better deal available, so give them a call.
Stay the course: Interest rates have already fallen three percent in just four months – that could mean a monthly saving of hundreds of dollars on your repayment amount. Why not keep your repayments where they were before rates dropped? Follow this strategy and you’ll potentially channel thousands of dollars onto you loan each year and take years off your repayments.
Increase your repayment frequency: Switching to fortnightly repayments is an effective method for channelling an extra month’s payment into your loan each year. How does it work? Rather than making 12 monthly repayments by paying them fortnightly you’ll make 26 repayments – giving you an extra month’s injection into the principal. Stick with this tactic and you’ll knock over four years off the life of a 25 year loan.
Lump sum: Have you just received a tax rebate, Christmas bonus or an inheritance – use every opportunity to drive down the principal amount of your mortgage. The more cash you put into your mortgage, the earlier you’ll repay your loan. Just remember, if necessary, you can usually release equity from your home if you have to unlock those extra dollars at some stage in the future.
