For those of you who are in search for ways to pay off your home loan sooner, look no further. We have found very straightforward and easy tips you can follow so you can pay down your home loan sooner than you think.
Tips To Pay Down Your Home Loan Sooner
These tips can be useful even if your goal is to buy an investment property, make some equity that you can eventually draw on.
Try Re-Financing
If you happen to have a mortgage that is 12-months old or more, you have the option to consider re-financing, so you can obtain a much better deal on your home loan. There may be some costs linked with the re-financing scheme, and it is important to take this into careful consideration.
Get A Split Home Loan
PerthBroker suggests that borrowers should consider split home loans to get maximum flexibility. The split home loan enables borrowers to divide their existing mortgage into a fixed or variable component. You have the option to lock in a low but fixed rate on a part of your loan, that is if you intend to limit any exposure to the variable rates.
Leverage From Variable Rate Cuts
The lower interest rate will help minimize your repayments, however, when the lender reduces the interest rates, you have to consider repaying much more than the base loan repayment total. This allows borrowers to save on their future interest payments.
Avoid Paying Interest-Only
Interest-only loans can spell disaster. It means you are capable of making lower repayment for the initial few years, however, it can mean that your repayments, later on, will be much bigger when it comes to finally pay off your principal loan.
Practice Increasing Your Repayments
The best way to pay off your home loan faster is to increase your repayments each month. When you repay more than your minimum, you can, later on, cut the total term of your loan and bag in the savings that can spell a lot of money in interest. As you pay it off earlier, the more you will eventually save over time. Some loan products may require an early payment fee for paying your home loan ahead of time. These costs can be pretty hefty and you have to check your contract before you do to avoid this from happening.
Check On Mortgage Features
Find some ways on how you can offset one account or the credit card that is linked to your home loan that can help keep your overall loan balance at a minimum. As you find for ways to keep your interest rates down, check first on the mortgage features and contracts before you sign.
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Explore Other Options
Before you seal the deal, you have to make sure you explore all other available options. It is important to take a good look at whether you can avail of a discounted rate for your loan with some financial offers that can include special rates on services or products for instance. In just a few easy steps, you can reduce your loan term and save a lot of money along the way.
