Imagine the relief of being debt free and not having to make mortgage repayments every month?
We all dream of owning our homes outright one day, but sometimes it can feel like it’s a lifetime away. There are a few things you can do to help speed the process along though, which will also help you save money too!
So, what can you do to reach financial freedom sooner?
Don’t pay less when rates go down – If your lender drops their rates then your minimum repayment will go down too, but if you can afford the higher rate then you should keep paying it. You probably won’t even notice that you are paying more because you’re already used to paying it.
Increase your minimum repayments – If you’re comfortable paying your minimum repayments then why not trying paying a little bit more? Even an extra $50 or $100 each week could end up saving you thousands of dollars in the long run by reducing the interest you owe and cutting years off of your loan term. If you think you might need the extra funds, you can get a redraw facility on your account that will allow you to take out any funds you have paid over the minimum amount.
Make your payments more frequently – Ask your lender if you can make your repayments weekly or fortnightly, instead of monthly. By doing this you will attract less interest and save money over the life of the loan.
Use an offset account – An offset account helps “offset” your mortgage by whatever amount is sitting in the account. Having an account like this can help you cut down your mortgage by hundreds of dollars a year. Many people find that they save a lot more money by putting their funds in an offset account as opposed to a regular savings account.
Refinance – Every couple of years you should review your mortgage and ask yourself it it’s working as best as it could be. There are always plenty of great home loan deals around so it’s well worth comparing what different lenders have to offer. You may even find that you’ve paid off enough of your home loan that you have enough equity to help service a new loan. If it’s been awhile since you refinanced it could be worth getting a loan quote to see what your options are.