How to pay off a mortgage faster

How to pay off a mortgage faster

When was the last time you looked closely at your home loan, the progress you are making on paying it off and how it compares to others in the market?

Follow these simple steps and many savings will follow as a result. You will have the opportunity to pay it off more quickly, invest in other assets or reach financial freedom sooner.

Here are five considerations for 2016:

Make smaller payments, more often

To cut the size of your payments is quite simple, just to make more of them on a regular basis. As well as paying off your loan faster, you will ultimately pay less interest overall. A great tip is to pay your mortgage fortnightly rather than monthly.

Pay just a little bit extra

By contributing an extra $100 or even $10, you’ll significantly reduce your mortgage over time. It may also be worth considering placing all bonuses, tax returns into your mortgage as every little bit counts.

Don’t decrease repayments when interest rates fall

When fees and interest rates decrease, and your repayments are lowered as a result, this is a great time to pay a little bit extra. By keeping your repayments consistent or taking advantage when rates fall you will be able to pay down more of the principle with each payment.

Offset it

If you can, use an offset account. A mortgage offset account is linked to your loan. One of the perks of an offset account is that it will save interest while still giving you access to your savings. For investors, mortgage tax deductibility advantages follow.

Find a better deal

Ultimately, your mortgage needs to suit you and your circumstances, or you will wind up paying too much. Speak with a broker as they can deal with your lender about fees, extra repayments, refinancing, or any other steps.

Source: MFAA - Mortgage and Finance Association of Australia