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TIME is the most important component in paying off your home loan faster. Just because your loan is arranged for a period of 25 years doesn't mean you have to take that long to pay it off. Every extra dollar you can repay will help you reduce the total interest payable and the term of your loan. Here are eight simple tips to own your home sooner:-
1. Look out for lump sums
Whether it's an inheritance or tax refund, deposit it straight into your loan account. Every little extra dollar you pay off reduces the interest payable and therefore decreases the term of your loan.
2. Repay fortnightly instead of monthly
Arrange for your loan repayments to be made as soon as your pay is credited to your account, especially if you are paid weekly or fortnightly.
3. Put any pay rises towards your loan repayment.
This is money you've never had, so you're probably not going to miss it. Ideally, you should try to put as much of your pay rise into your loan account as you can.
4. Offset loan account
This account is a great way to make the most of your savings. It offsets 100% of the savings balance against your home loan before the loan interest is calculated.
5. Have your Term Deposit interest deposited to your loan
The interest you earn from your term deposit is a great additional payment on your loan. Upon maturity of your term deposit choose to have your interest transferred automatically to your loan account.
6. If interest rates go down, keep your repayments up
Resist the temptation to reduce your repayments, this is a great opportunity to cut thousands of dollars and years off your home loan without changing your current routine.
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