As anyone who has ever played Monopoly will tell you, buying a house is amazing, exciting and undoubtedly fun, paying a mortgage is not. You have to turn over your property card, it is grey and sad. If we’re looking outside the world of board games, a mortgage is necessary but still not all that fun.
For tips to pay off your mortgage faster, check out this list of advice that will help you to get your mortgage behind you and allow you to continue to live comfortably in your dream home.
Choosing a home loan is a major financial decision and shouldnt be taken lightly. You’ll have to do your research into which home loan or mortgage option is best for you. How much you can borrow to help to pay for your dream home will depend on a whole host of variables from your income, credit reports and existing financial commitments. There’s no ‘one-size-fits-all’ loan that’s right for everyone, you’ll need to speak to your individual bank about your current needs and financial capabilities. Once you figure out how much you can borrow you’ll be able to get a clearer picture of your mortgage and how much you’re going to be able to repay every month by using a mortgage calculator, head here for more info.
A good way to pay off your mortgage quicker without having to take on much more of a financial burden is to begin by making fortnightly repayments rather than monthly repayments. You won’t be paying twice as much but by paying half the monthly amount every two weeks at the end of the year you will have made the equivalent of 13 months of mortgage repayments. How? Well, if you remember what they taught you in primary school - ‘thirty days has September, April, June and November. All the rest have thirty-one…’- then you’ll know that there are 26 fortnights in the year!
We know that not every month is the same in any given life. There are ups and downs and our positions are constantly changing. Some months, your financial situation will be better than in others. So, when you have those months where luck is on your side and you come into a windfall you should make extra or higher repayments. Basically, a sure fire way to pay off your mortgage sooner, is to make repayments as if you had a loan with a higher interest rate. Even if you were previously on a loan with a higher interest rate and you manage to switch to a plan with a lower interest rate keep making the higher payments whenever you can to help you get ahead of your repayment schedule.
We know this is a bit of a technical financial phrase but bear with us here! An offset account is a transaction account linked to your mortgage and the amount you save in this account reduces the amount of interest you’ll be paying on your mortgage and, obviously, having a smaller amount of interest due will mean that you’re able to pay off your mortgage faster. It’s worth noting that if your offset account balance will always be low (think under $10,000) then it might not be worth it. Remember to talk to your financial advisor about your specific financial situation.