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Paying off your Home Loan Quickly
This brief guide explains the most effective ways
to pay more money off your home loan in a short period
of time, plus other tips to help you own your home sooner.
9 Ways To Own Your Home Sooner
1. In the first few years of a standard
25 year loan, if you only make the minimum repayment,
the principal will reduce ever so slowly. However, if
you pay a lump sum OF A FEW THOUSAND OR EVEN A FEW HUNDRED
( tax rebate ?) every few months or so, you will notice
the principal come down more rapidly. Making extra repayments
in the early years of a mortgage can make a huge difference
and can be redrawn in an emergency !
2. If you don't need lots of bells
& whistles with your mortgage, why not take out
a basic options loan. The interest rate is usually about
0.60% lower than the standard rate.
3. Increase the frequency of your
repayments. Divide you monthly payment by 2, and pay
fortnightly. Because there are 26 fortnights in a year,
this equates to one extra months repayment every year.
4. Ask your lender about special packages.
For example, larger loan sizes can enable you to obtain
a discount, as well as waiving the monthly account keeping
fee (on both the loan account and your savings account
5. Take out an All-In-One-Account.
You pay your salary directly into the loan account,
pay all your bills on interest free visa, then at the
end of the month the balance on Visa is added back to
you loan account. That way, your salary works hard all
month to reduce the amount of interest on your loan.
You can access "money to live on" via ATM,
telephone or internet.
6. Refinance your loan with a lender
who has a lower interest rate. Refinance costs can be
surprisingly low - usually mortgage discharge fees of
approx $300, then loan setup costs with the new lender
of approx $400 - $1,000. ( but beware of fees if moving
from a fixed rate loan )
7. If interest rates are on the rise,
try locking in a fixed rate for all or part of your
loan.
8. If you have enough equity in your
house, instead of taking out a car loan or personal
loan at rates which are 4-5% higher than home loan rates,
simply borrow the money through the mortgage. It may
be possible to consolidate lots of smaller debts, into
your home loan.
9. Instead of buying a negatively
geared investment property (that may cost you $100 per
week), why not purchase a positively geared property
(that earns you $50-$100 per week). By putting this
extra money into your home loan you can reduce the loan
