Paying off your mortgage faster, while rates are still low!

This question is right up there with the “What is the secret to eternal life”. Everyone is looking for the easy way to pay their loans off sooner without actually making any sacrifices or putting in the hard work. Unfortunately it doesn’t work like that!

Interest rates are @ their lowest levels in years, and there are some simple tips that will help you ride out the next 2 years, plus pay your mortgage off;

If you’re loan is a Principal and Interest loan, your repayments will not have changed since interest rates reduced, you should ring your bank and ask for your repayments to be changed to the minimum P & I repayment. This allows you to still pay off the loan, but also have access to redraw, and if you ask to make the repayments @ the same amount the extra you pay, will be available as redraw, should you need to access the funds on a rainy day.

If you’re loan is set up as Interest only, pay the repayment as if it were 2% higher. That way, when interest rates do go up, and they will, you do not have to change your family budget.

Start paying your mortgage weekly, rather than monthly. Interest is calculated daily and charged monthly on the outstanding balance, simple math; you’ll pay less interest as you have more money in your loan account during the month.

If you can’t change the loan, change the loan, basically, if your loan is not suited to your needs, call us and we can talk about what else is available.

Or, you can sit down with the team @ wHeregroup and formulate a “game plan” through investing in property. If this does suit you, it could be the difference in thousands of dollars in interest and years off your home loan? Well worth a chat, don’t you think?

• Most importantly, stick to the K.I.S.S rule – Keep It Simple Stupid – the more you pay, the less interest you incur, the quicker you are home loan debt free.

Currently all over the news is “Interest rates to increase by 2%”... the part they don’t tell you is that currently 3 year (the most common fixed rate term) fixed rates are very close to 7%... that’s just under 2% higher than you should be paying right now, so why fix in at 2% higher now, why not pay your repayments based on a 2% higher rate now as this will:

• Accustom yourself to the higher amount now
• Build your available cash in redraw in case you require it later

Depending on your cash flow, you can pay your mortgage off at a much fast rate than the 30 years given in your loan contracts; it’s about setting out a budget, sticking to it, and looking to the future.