The average home loan term in Australia is 30 years, but did you know there are ways to pay it off sooner? Here are some strategies people sometimes use to get ahead on their 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.
Switch to fortnightly repayments
If you’re currently repaying your mortgage monthly, consider switching to a fortnightly plan. You’ll end up paying an extra month’s repayment as there are 26 fortnights in a year. Let’s say your monthly repayments are $2000. In a year, you’d repay $24,000. But if you paid fortnightly, you’d repay $26,000.
Pay extra on top of your repayments
Every extra dollar you put towards your mortgage will make a significant difference over time. The reason is that extra repayments help 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.
Open an offset account
An offset account is an everyday 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.
Consider a redraw facility
A redraw facility lets you make extra repayments on your home loan, which reduces the interest you pay. The benefit is that you can use the money in your redraw if you have an unexpected expense.
Refinance to a mortgage with a lower rate
If it’s been more than a year since you reviewed your home loan, consider refinancing. Interest rates remain at record lows and the market is competitive. Simply switching to a loan with a sharper rate may help you 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. Call us today.
