Congratulations – you have achieved your goal of buying a home! Of course, you have a home loan, and your next goal should be paying it off as quickly as possible. However, that is not what your bank wants you to do.
With higher interest rates and the conflict that exists between your goals and your bank, it is important to actively look after your own interests.
At Bayland Finance, we recognise the significance of equipping you with the tools and insights necessary to achieve your financial goals. This includes regular free home loan health checks to identify simple ways to pay off your home loan sooner.
Below are six ways that will accelerate your journey towards mortgage freedom:
#1 Secure a Competitive Interest Rate
With high interest rates, getting a good rate is very important. With many lenders in the market competing for your business, it’s crucial to carefully compare and negotiate to get a good deal on interest rates.
#2 Consider Refinancing Opportunities
Interest rates are everchanging – regularly checking your mortgage can help you find good refinancing options. A thorough review of refinancing choices can lead to significant savings on interest and improve your financial situation in the long run.
#3 Embrace Principal and Interest Repayments
While ‘interest-only’ loans might seem appealing when interest rates are high, choosing to pay both principal and interest is smarter for long-term financial health. Although it might mean some short-term sacrifices, this method helps you pay off the loan faster and save a lot on interest in the long run.
#4 Harness the Benefit of Offset and Redraw Facilities
Offset accounts are a useful way of reducing your interest costs. By using an offset account, extra savings can be used to lower the remaining loan balance, which helps keep interest costs down. For example, on a $500,000 loan, having $10,000 in your offset account can take a year off your loan term and $48,000 in interest.
#5 Enhance Regular Repayment Commitments
Every payment helps reduce interest – increasing the amount you regularly pay is a smart approach. Using the benefits of making extra payments can help pay off debt faster and build financial stability as interest rates change.
#6 Capitalise on Lump Sum Repayment Opportunities
Extra money, like an inheritance or sale of an investment, provides a great opportunity to make a lump sum payment off your mortgage. For example, a $30,000 payment on a $500,000 could reduce your loan term by over 4 years and save you $131,000 in interest costs.
We hope this provided you with some new ideas on how to pay off your home loan sooner and save you thousands in interest costs.
At Bayland Finance, we remain committed to assisting you in your financial success. If you would like to organise a free home loan health check with us, please contact us now to get started!
