How to pay your loan off sooner
The size of your mortgage can appear overwhelming at times, but it’s important to know that you can take control and reduce the length of your loan.
We’ve put together some helpful tips to help pay off your mortgage sooner, which will reduce the amount of interest you’ll pay:
- If you can afford it, contribute more than the minimum loan repayment. This is particularly beneficial at the start of your loan when the principal amount is at its highest. Even small extra repayments will all add up over the long term. Just keep in mind that sometimes extra repayments can be capped by your bank.
- If available, make use of an offset facility. Every dollar you have in your offset account reduces the amount of interest you pay on your mortgage. For example, if your home loan is $400,000 and you have $20,000 in your offset account, you’ll only pay interest on $380,000.
- Consider making weekly or fortnightly repayments, rather than monthly. And align repayments to your pay cycle.
- Perform a ‘loan health check’ every year to make sure your home loan still meets your needs and offers the best value.
- Use lump sum payments such as tax returns or work bonuses to reduce your loan.
- Take advantage of free redraw which provides you with the freedom to make extra repayments, without the worry of not having funds available in the case of an emergency.