Paying off your loan faster really is as simple as having the best interest rate
possible and an additional payment strategy. The three main methods to pay off your
mortgage faster are:
- Negotiate/remortgage for a cheaper interest rate and pay only for the features you
need
- Make your payments more often
- Make payments greater than the required amount – and as much as you possibly can
By using any one or any combination of the above methods, you can achieve substantial
savings. It's"how you go about achieving thesg objectives and maintaining your advantage
that cownts.
Pay Extra
Make sure your loan gives you the ability to pay extra be they regular or ad-hoc
payments. Making additional payments on your loan, big or small, is a real benefit
over the lifetime of your loan with regards to reducing interest charged and the
term of your mortgage. By calculating interest daily, extra funds have an immediate
effect on the loan balance and therefore the interest payable. 100% offset accounts
also help reduce the amount of interest payable while still having access to the
funds.
Try to make extra repayments
Making extra payments at any time will have the greatest impact on your loan especially
early on. In the early stages of a loan, you are mostly paying interest and not
reducing the principal much at all. So every dollar you can use to pay off your
loan earlier means a quicker reduction of principal and results in less interest
payments.
Try to make 13 repayments a year
If you pay your loan more frequently than monthly and many loans will allow you
to pay weekly or fortnightly, you get interest savings because you are reducing
the loan balance on a more regular basis to save you thousands over the term of
the loan.
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