Making consistent additional repayments either monthly or lump sum payments when bonuses are received etc will make a huge difference. For example making additional monthly payments of $200 on a 30 year term loan of $400k will save you $43,034 in interest and will take off 4 years and 10 months of your loan life.
If your loan payment is paid monthly, you can make significant additional savings by simply halving your monthly repayments & pay fortnightly instead! You will end up paying an additional months worth of your mortgage every year which will reduce the principal faster
The easiest way to pay your loan off sooner is to find a lower rate than the one your currently have, but maintain the current payments you make. Having flexibility to make additional payments is key. If you fix your full loan your normally have a 5% buffer of extra repayments you can add without being charged. However there are a lot of different products that allow the flexibility to be able to do both. If you are going to refinance, make sure the costs of doing so don’t outweigh the benefits.
Loan with offset facilities allow you to have your salary paid directly into the offset account which reduces the interest you pay on your home loan. The balance of the account is “offset” against the balance of the loan for interest calculations and because interest is worked out daily, it can save you a lot of money over the long term. Recommended for good savers however their can be to much temptation for many.
If you have an offset account, changing your repayment dates to match your income cycle helps you to take advantage of the money siting in your account for as long as possible.
If possible don’t lower your payments, it may seem tempting to let your home loan repayments drop so you have more cash available but if you are able to keep the payments the same it can make a huge difference to knocking down the principal or your loan.
The big banks aren’t the only or necessary the best places to borrow money. Many smaller banks & specialist lenders have very competitive rates and loan available. Just because you haven’t heard of a lender doesn’t mean they aren’t a reputable lender. Your mortgage adviser will know which lenders are credible and suitable for your situation.
Reviewing your loan on a regular basis will help you to assess it effectiveness and identify any opportunities to decrease the loan term which will lead to saving you $$$. Being on top of changes rather than waiting months or even years will potentially save you a lot of money.
Trying two or more of these tips can ramp up your savings dramatically. I hope you have find these tips helpful. For any advice of loan structure or how to pay down your current lending please get in touch via the button below.
Ben and I were referred to Jonny to purchase our first home. Jonny was prompt with emails and met with us both at the beginning of the process to get to know us and our goals. He made us both feel comfortable and supported and answered the 101 questions thrown at him quick and concise. As someone who didn’t know a thing about buying property or mortgages it was important we found someone who was able to support us through the whole process and explain the ins – and – outs, we both believe we found that in Dixon Mortgages.
We went through 3 different mortgage brokers before Jonny, they all said purchasing our first home was impossible to do due to financials. Jonny didn't just make it work, he helped us in every way to make it happen. Great communication especially purchasing through lock down. Highly recommend. Thank you so much for everything you've done for us, we still cant believe we are sitting in our OWN home!
Deciding to use Dixon Mortgages was the best decision I could have made. I was worried about all the work involved in buying my first house but Jonathan did everything and had great communication all the way. I know for a fact I still wouldn't be in my first home if it wasn't for them. I fully recommend using the team at I know you won't regret it.
I got in contact with Jonny after being referred to him about my property portfolio. He was very personable, quick to reply and helped with the necessary documents I needed to initiate the process. I felt he was 100% behind me and my ideas.
Jonny was very knowledgeable about the property market and what we had to do to further our portfolio. He was very personable, easy to deal with, and I would highly recommend to any prospective purchaser.