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Get rid of your mortgage faster

Get rid of your mortgage faster

April 21, 2011

If the thought of being chained to your home loan for 30 years sends you into a cold sweat you may want to consider these tips to fast track your way to a peaceful night’s sleep.

  • Overall, aim to pay off at least an extra month of mortgage repayments per year.
  • Shop around. Now that the government has abolished home loan exit fees, it could be time to refinance. Home loan calculators will take the leg work out of this process and give you a clear idea of how your current mortgage stacks up.
  • Pay your mortgage weekly to save on interest. Divide your monthly repayments by 4. This figure will be higher than if the bank calculates it for you as they will most likely simply adjust your payment to reflect the monthly payment.
  • If you have a 30-year loan, can you reduce it to 25?
    If you receive a little something extra such as a tax refund, inheritance or other windfall, resist the temptation to splurge and put it straight into your mortgage.  
  • Create some extra cash a couple of times a year by getting rid of unwanted ‘stuff’. Have a garage sale, or list on eBay and put the money into your home loan.
  • If you’re on two incomes, it’s a great idea to pay one into the loan and live off the other.

Find out if you can benefit from a 100% offset accounts. An Australian phenomenon, offset accounts are deposit accounts that save you interest by the amount that would have applied if the money in your offset account had been paid into the home loan. If you bank spare money into your offset account, each day it remains there is another day you save on interest.

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