How to pay off your home loan faster

Paying off your mortgage early is the dream of everyone with a home loan.  Paying off early will saving you money, and the removal of one of the largest financial burdens we face will bring great relief to you and your family.  Here are some ways to get rid of your mortgage sooner.

1. Switching to fortnightly payments of half your monthly repayment will mean you make an extra repayment each year (as each year as 26 fortnights).

2. Linking an offset account can have a massive impact. An offset with a healthy balance can save thousands in interest which reduces the time to pay off.

3. Cutting back on expenses (if you can!) means you can direct more money to the mortgage.

4. Make extra payments. Tax returns, bonuses, flogging your unwanted garden tools on Marketplace... it all adds up.

5. Making higher repayments than the minimum repayment will all add up over time.

6. Switch to a loan with a lower interest rate, but keep your repayments at the higher amount.

If you would like to know more about how to optimise your finances to pay off your mortgage sooner please get in touch!

Refinance case study: one conversation could save you $141,759

You might be surprised at the potential savings from refinancing your home loan. Emily and Jack bought their first home in Rozelle six years ago and had not reviewed their home loan since then. However, with recent changes to the market, they were now ready to discuss refinancing.

We looked at their financial position and discussed their goals. They were looking for a lower interest rate, better online services, to pay down their loan sooner and consolidate debts. Comparing over 30 lenders we were able to select a loan tailored to their needs and objectives.

We selected a loan with a lower interest rate, minimal fees, an offset account and redraw facility.  The offset account works for Emily and Jack as they both earn an annual bonus, and putting the bonus income in the offset will allow them to pay off their loan sooner by reducing the interest payable.

When we refinanced the mortgage, Emily and Jack also took the opportunity to consolidate their debts. By borrowing an additional $25,000 they were able to clear and close their credit card and car loan. This had the benefit of reducing their overall monthly loan repayments, and an additional benefit of streamlining their finances as they only had to manage the one monthly repayment. The lender we selected has an excellent online banking portal - something that was very important to Emily and Jack.

We selected a low interest rate with a $4,000 cash back incentive to maximise savings. With their $1,200,000 mortgage this refinance will save them an incredible $8,725.36 in the first 12 months, and a total savings of $144,759,000 over the life of the 30 year loan*. This savings, achieved purely by refinancing, allows Jack and Emily to pay off their mortgage sooner, a primary financial objective when we first spoke.

We are up to date with the latest market information and are committed to finding you the best possible rate. If you want to chat about the refinance options available to you, contact Garreth today on 0414 444 683.

*Interest rates are not fixed and will vary in accordance with the market.

Expert advice from a broker committed to finding the best solutions for your needs

Why now could be a great time to review your mortgage

Reviewing your home loan regularly is sensible, and never more so than now where things are changing so fast.  We’ve recently seen the official cash rate slashed, and this has created a very competitive mortgage landscape.  There is plenty to consider before taking the step, and you should make sure you understand all the pros and cons.

One of the main benefits to refinancing is to take advantage of lower rates at a competitor, or sometimes even with your own lender.  Lenders will often put very competitive rates on the market to attract new customers, leaving existing customers paying more.  And the difference between one lender and the next could be thousands of dollars a year.

It could also be that your circumstances have changed since you initially took out your loan.  Perhaps you want to clear your credit cards and consolidate some debts, or want to access some equity to start that renovation you’ve been talking about.   

To make sure everything is factored into your decision, you will need to understand your existing rate, repayments, and fee schedule.  Will you have to pay LMI again?  Is there a break cost such as with a fixed loan?  There might also be other features such as offset accounts, or user-friendly internet banking for you to consider.

Your property value also comes into the equation, so we would look at some data to understand what the house or asset is worth.  

If you find an alternate option to your current loan that meets your needs and is going to save you money then it’s usually a simple decision to make.  

We can compare lots of different lenders and, if there is a better opportunity, we’re able to access it. We are always working to give you great advice that’s in your best interests.

Contact us today for a home loan health check.  You could save yourself some serious money.