Wilson Finance Solutions
Chances are, you took out your home loan over the standard 30 year loan term. But let’s be honest, do you really want to be paying your off your mortgage for this long? Here are 10 tips to help you pay off your loan much quicker, saving thousands in interest along the way.
1. Make more frequent repayments
Instead of making repayments each month, why not pay half of your required monthly payment every fortnight? As there are 26 fortnights in a year, you’ll end up paying an extra month’s repayment without even noticing!
For example, if your monthly repayments are $2,000 by paying monthly you’ll pay $24,000 off your home loan. But if you pay $1,000 each fortnight you’ll have repaid $26,000. You’ve already trimmed almost 4 years off your loan by doing this.
2. Make extra repayments
Even small extra repayments can have a big impact over time. That’s because additional payments come straight off your loan balance. This lowers the interest component of next month’s repayment, so more of that payment reduces your loan balance.
If you pay $100 extra per week on a $400,000 loan you will knock 8 years off the 30-year loan term!
3. Tap into redraw
A redraw facility lets you withdraw cash from your home loan if it’s needed in an emergency. This makes it reassuring that you can add any spare funds to your loan to help pay it off sooner, and still have access to the cash if it’s needed.