10 Tips to Pay Your Mortgage Off Faster
Most mortgage holders will tell you that it would make them extremely happy to see their debt cleared. But if you ask that same mortgage holder what strategies they are utilising to make that a reality there is a good chance the reply would be, “Not much”.
There are plenty of real-life tips that you can employ to kick start your debt reduction, its just a matter of finding which one works best for you and your money management habits. Here we have listed 10 easy ways you can chip away at your home loan and get the mortgage monkey off your back.
Commit to a plan
The first step is literally deciding and committing to making the first step. Shift your internal dialogue from saying “I am trying to pay my loan off quicker” to “I am going to pay my loan off quicker”. Change it from an aspiration to a realisation.
Don’t over commit to start with
Although hindsight is always 20/20, its imperative that you set yourself up to succeed and not fail by taking out a loan that isn’t at the top end of your borrowing capacity. Give yourself some wriggle room from the start.
Make your repayments higher than the minimum
It doesn’t get more basic than this but by making your scheduled repayment higher than the minimum required you will make the debt reduce faster without even thinking about it. The benefit of doing this is that you can also revert to the minimum repayment amount should things become tough financially.
Reduce the loan term
Most people opt for the longest term possible when taking out their loan but at any time you can apply to have the term reduced which will in turn see the loan clear more quickly. And remember, the lower the term, the less interest paid over the life of the loan.
Split your Loan
With historically low interest rates peppering the market and fixed rates at an unprecedented low, many mortgage holders are choosing to split their facility. Having both fixed and variable products means that you can take advantage of the lowest of the low when it comes to fixed loans and still have the flexibility of a variable loan to utilise offset.
Make more frequent payments
If you request your lender to have your contracted monthly mortgage repayment reverted to fortnightly instead, you will end up making one extra payment per year as there are twelve months yet twenty-six fortnights.
When rates drop keep your repayments the same
There have been rate drops thanks to the RBA recently so make them work to your advantage. Instead of requesting your lender realign your repayments with the new rate, keep the repayment the same and pretend like nothing has shifted.
Use any monetary windfalls to reduce your loan
If you are lucky enough to receive a monetary windfall such as a tax return, inheritance, salary bonus, sale of assets or even lottery win commit to directing those funds into paying off your debt, or at least part of it.
Make your offset account work for you
One of your most effective tools in your financial arsenal is your offset account so make it work for you. Using your credit card to pay bills and opting for a lender that offers multiple offsets are just a couple of ways that you can slash your mortgage by simply having cash to offset the interest payable.
Use a mortgage broker – always
A mortgage broker will not only secure a market leading rate for you right out of the gate but will advocate on your behalf for the life of the loan ensuring the lender always offers you the maximum discount available . Regular reviews with your broker will see you reap the reward of watching your loan decrease quickly.
There are many ways to see your debt diminish no matter how plugged in you are to your finances. Whether you are hands on with your accounts or like to “set and forget” there still are plenty of strategies to employ to see yourself debt free fast. Just ask one of the Blackburne Mortgage Broking team for more information to kick start your debt reduction.