1. Review your Mortgage on a Regular Basis
You should review your mortgage annually, especially if you borrowed 80% of the valuation of your security, or if your circumstances have changed like an increase in the value of your property or reduction of the balance of your loan.
The lender who had a sharp interest rate three years ago may not be very competitive now, or you may have had to go with a lender because it was the only lender that would do your deal at the time. With plenty of lenders offering interest rates below 4.0% p.a., make sure that you have a competitive home loan with minimal fees and penalties, otherwise, you may be paying too much.
A year is a long time in the finance industry and lenders change their interest rates, fees, and policies depending on what type of client they wish to attract.
2. Pay Fortnightly or Weekly
Consider paying your loan fortnightly or weekly, instead of monthly, as there are 26 fortnights or 52 weeks a year; so by paying half your monthly repayment every two weeks or one quarter every week instead of once a month, you will end up paying one extra payment per year without even noticing.
3. Pay a Little Bit Extra
If your monthly repayments are $965, increase the repayment to $1,000 per month. It may not seem like much, but it is very effective in repaying your loan quicker.
Just by increasing your loan by $10, can reduce your loan term by years and save you thousands on interest without breaking the budget.
4. Deposit Tax Returns and Financial Windfalls into your Mortgage
Paying the occasional lump sum deposits like your tax refund, or annual work bonus into your home loan, can make a significant difference to your loan balance, especially if you make it an annual habit.
5. Use an Offset Account or Redraw Instead of a Savings Account
If you have a savings account, you will be paid around the 2% p.a. in interest, and pay tax on the amount earnt while you could pay it into your home loan, and save around the 4% p.a.
Loan Broker to the Aussie Battlers