At Settle Easy, we know that buying property and committing to a mortgage is a really big deal. Most mortgages are based on a 30-year amortization, meaning they are paid off in full after 30 years – but how good would it be to pay your mortgage off sooner?
Here are our top five tips for paying off your mortgage a whole lot faster.
- Pay more than the minimum repayments
This doesn’t mean you have to pay more every single repayment, but the more you pay and the more often you pay it, the more time and money you will save long term. Every single dollar you put into your mortgage above your repayment amount affects the capital, which means down the track, you’ll be paying interest on a smaller amount. Extra lump sums or regular additional repayments will help you cut many years off the term of your loan.
- Budget effectively
Outgoings can add up quickly so be careful about big-ticket items, but don’t forget that ‘micro spending’ on things like take away coffee, bottled water or that spur of the moment treat can all add up too. Let’s say you enjoy popping into your local cafe to buy takeaway coffee most days. That might cost you $4 a day or $20 per week. If you only buy one takeaway coffee per day, over the course of a year, that’s $1,040 which in after-tax income, could mean you’ll have to earn $2,000 a year to pay for your caffeine addiction – it all adds up.
- Review your loans regularly
Life changes and so should your mortgage. That’s why we recommend you give your home loan a health check every 12 months to make sure it’s still right for you. You might have changed jobs, welcomed a new family member or received a pay rise within the last year – these things can all affect your home loan. Ask your lender about lower interest rates or a better deal on your home loan. If your lender can’t help, shop around – it might just save you thousands and has the potential to shorten the lifespan of your loan.
- Offset accounts can really help
If you have any spare cash, put it into an offset account attached to your home loan. Any money in an offset account reduces the balance used to calculate interest. The more money in the offset account, the less interest you will have to pay!
- You do you
Don’t compare your life against what others appear to have. If your goal is to pay off your mortgage sooner, maybe rethink that expensive holiday or find a way of making more money via a second job or smart investment. And if you need refinancing advice, are in the market for a home loan or are thinking about investing in property, talk to the experts. Our partners @mylocalbroker work around the clock to meet the needs of their customers. Their number one aim is to match their customer’s goals with the best possible solution – every time.
For all your conveyancing needs, Settle Easy’s trusted conveyancers are here to help. We take special care to look after you every step of the way so you can focus on what matters most.