How do I pay off my mortgage sooner?
Published by MFAA
Pay more, more often
Want to pay off your mortgage early? Then make bigger mortgage repayments, more frequently. You’ll own your own home sooner and save a bundle on interest.
Assuming you have a mortgage that lets you pay extra, you should pay more and pay often. The interest charged on a $300,000 home loan at a rate of 7.15% over 30 years with monthly repayments is over $420,000. By paying off an additional $50 a month, you’ll reduce the interest bill by $39,000 and your loan term by two years and four months. You could look at making repayments weekly or fortnightly rather than monthly.
Read the fine print or talk to your finance broker to see if you have the flexibility you need to reduce your interest charges.
Act now – you pay most interest up when your loan is new
Most mortgages are structured so that you pay off most of the interest in the early years. If you are serious about wanting to reduce the interest you pay on your home loan, start when your mortgage is new.
Get rid of car loans and credit card debt
You’re generally paying a higher interest rate on small loans (e.g. a car) and your credit cards so it makes sense to eliminate those debts first. So, put a rein on your credit card usage and then tackle your mortgage.
Make sure you’re loan is the right one for you
When you entered the mortgage market, you might not have been as well informed as you are now. Or the market might not have been as competitive. Stay in contact with your MFAA Accredited Finance Broker. They can let you know if there is a new home loan product that will save you money over the term of the mortgage.
To learn more about how you can pay off your home loan sooner, talk to an MFAA Accredited Finance Broker today.