The average home loan term in Australia is 30 years, but did you know that there are ways to pay it off faster? We’ve compiled some strategies that can be used to get ahead on your home loan. Of course, what suits your unique situation depends on a lot of variables – so it’s worth getting in touch for tailored guidance.
1. Switch to fortnightly mortgage repayments
If you’re currently repaying your mortgage monthly, you might consider switching to a fortnightly plan. With this strategy, you’ll end up paying an extra month of repayments as there are 26 fortnights in a year. For example, if your monthly repayments are $2000 you’d repay $24,000 annually. But if you paid fortnightly instead, you’d be repaying $26,000.
2. Pay extra on top of your repayments
Every extra dollar you put towards your mortgage will make a significant difference over time. The reason for this is that extra repayments help to reduce the monthly interest. Whether it’s a tax refund, a work bonus, or a gift, make a habit of putting additional money into your home loan when possible.
3. Open an offset account
An offset account is an everyday bank account linked to your home loan. The balance is offset against the amount owing on your home loan, so you pay less interest. The benefit is the convenience of accessing your money at any time.
4. Consider a redraw facility
A redraw facility lets you make extra repayments on your home loan, which reduces the interest you pay. You can then also use the money in your redraw if you have an unexpected expense pop up.
5. Refinance to a mortgage with a lower rate
If it’s been more than a year since you reviewed your home loan, consider refinancing. Simply switching to a loan with a sharper rate may help you to get ahead.
The key to paying off your mortgage sooner is to ensure you have the right structure in place. We can review your loan and find a product that best suits your needs. Book an appointment with one of our Borro brokers today or call the team on 1300 1BORRO.