For anyone paying a home loan the idea of owning your own home debt free is irresistible. Here, we share with you 5 simple tips to help you get ahead on your mortgage.
Tip 1: Get a home loan with a flexible payment structure
Before you sign on your home loan, find out if you can make increased regular payments and lump sum repayments without incurring a penalty. Also be aware that these extra features will incur additional costs. Get a good mortgage broker to weigh up the pros and cons on your behalf.
Tip 2: Make extra repayments as early as possible
Most people don’t realise that the majority of the payments made at the beginning of a home loan actually go towards paying off interest and not reducing the principal. Therefore any extra payments that you make from the very beginning go towards reducing your principal and minimising interest payments down the track.
Tip 3: Make your first mortgage payment on settlement date
This is yet another excellent example of how making early payments can reduce your principal and future interest repayments.
Tip 4: Make more frequent repayments
Where interest is calculated on a daily basis, making payments on a more frequent basis whether fortnightly or weekly serves to cut down on your interest payments
For example, making fortnightly repayments means that you’ll be making 13 monthly repayments each year, thereby reducing the principal and term of your loan.
Tip 5: Paying income directly into your home loan
As interest is calculated daily, getting your salary direct to your home loan account effectively reduces the principal you owe from the moment your salary is in the account, this is in turn reduces the interest.
If you have any questions about your home loan or are concerned about interest rate changes talk to your expert mortgage broker today.