When it comes to increasing your equity and opening up opportunities for further purchases and investments, paying down your mortgage as quickly as possible can be crucial.
Michelle Hutchison, spokesperson at Finder.com.au, said that there are a number of techniques that you can put in place. And they don’t require you giving up your daily coffee.
“There are several ways to help pay down your mortgage faster and can also help you save significantly too,” Hutchison said.
1. See how your loan stacks up
“Firstly, it’s worth seeing how your loan compares to what’s in the market,” she said.
“Checking your home loan every three months or so is a healthy habit to see if your lender is keeping up with rate cuts, what features and services you’re using or need, and how it measures up to other home loans.”
2. Maintain your repayment amount during a rate change
If the rates decrease, ensure you keep paying back at the same rate as you were previously affording.
“For instance, if your interest rate dropped by 0.25 percentage points – from 5.50% to 5.25% – and you kept your repayments at the same level as 5.50%, you could potentially cut two years off the 30-year loan term and and save over $23,000 for a $300,000 home,” Hutchison explained.
3. Make fortnightly payments
If you’re currently paying off your loan monthly, then you could be missing out on potential savings that come as a result of shifting your repayment frequency.
“By doing this you can potentially save over $57,000 in interest charges and cut an extra two years off the loan term,” she said.
4. Offset accounts
“If you put your salary into your offset account, you can make your money work harder because your savings offset against your home loan to reduce the interest charged.”
This article first apppeared on Property Observer.