Congratulations – you’ve achieved your goal of buying a home!
Now it’s time to focus on the next big milestone: how to pay off your home loan faster. While it may not be what your bank wants you to do, it’s definitely in your best interest.
With rising interest rates and a clear conflict between your goals and your lender’s, it’s more important than ever to actively look after your financial wellbeing.
At Bayland Finance, we’re here to equip you with the tools, insights, and support you need to reach mortgage freedom sooner. That includes regular (and free!) home loan health checks to help you identify smart, simple ways to reduce your loan term and save on interest.
Here are six practical tips to help you pay off your home loan faster and take greater control of your financial future.
#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 loan 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!
