SIX WAYS TO PAY OFF YOUR HOME FASTER IN 2024
SIX WAYS TO PAY OFF YOUR HOME FASTER IN
2024
For most people, their home is their biggest expense and the
sooner you can pay down the debt, the better off you’re going to be
financially. Fortunately, there are a number of things you can do to cut years
off your mortgage.
A lower interest rate isn't just a number on paper – it's a
direct pathway to paying less over the life of your loan. While the idea of
refinancing might initially seem like a substantial undertaking, the long-term
financial benefits are something that you need to review regularly with your
mortgage broker. However, refinancing isn't the only option. Negotiating with
your current lender and asking them to match the interest rates offered to new
customers can yield similar benefits.
Changing your repayment frequency from monthly to
fortnightly might appear a small change, but it can make a significant
difference. By opting for fortnightly repayments, you end up making an
additional month's payment every year without straining your budget. This small
adjustment accelerates your repayment schedule, bringing you closer to your
mortgage-free goal.
Windfalls, such as work bonuses, tax refunds or inheritances
can serve as important opportunities to make additional payments towards your
mortgage. The beauty of this approach lies not only in shortening your loan
term but also in reducing the overall interest paid.
While making extra repayments is important, there might be
times when you need that money back. A redraw facility addresses this issue by
pooling additional repayments, allowing you to access these funds when
necessary. Although some lenders may charge a nominal fee for withdrawing
funds, this feature can prove invaluable when financing renovations or handling
unexpected expenses without erasing the progress you've made.
An offset account is a financial tool linked to your home
loan balance. It works like a transactional savings account by enabling you to
withdraw funds for everyday expenses. The funds in your offset account directly
reduce the interest charged on your loan principal, leading to potential
savings.
As your personal circumstances evolve, so should your loan
repayment term. If you find yourself in a more comfortable financial position,
consider reducing your loan term – for example, from 30 years to 25 years. To
make this feasible, you'll need to increase your minimum monthly repayment. If
this adjustment fits comfortably within your budget, the benefits are
significant – you can end up paying off your loan years earlier with
substantial interest savings.
Important
note:
While every
care has been taken in the preparation of this article, ADNA Financial Services
makes no representations or warranties as to the accuracy or completeness of
any statement in it including, without limitation, any forecasts. Material
contained in this news item is for general information only. It comes from a
number of sources. Some of the content is provided by external writers. Any
advice provided within the various articles is of a general nature only and
should not be construed as providing advice on any of the topics discussed.
Your needs and financial circumstances have not been taken into account.
You should
always consult a qualified Mortgage Broker and for Financial Advice a qualified
Financial Adviser for financial advice and a registered tax adviser should you
have specific questions about tax.
© First
published 10 January 2024