Paying off your mortgage faster is a financial goal that many homeowners aspire to achieve. While it may seem like a daunting task, there are some smart strategies you can implement to accelerate your mortgage repayment plan. Let’s explore three effective tips to help you become mortgage-free sooner.
1. Boost Your Offset Account with Additional Savings
If you’re fortunate enough to have an offset account linked to your mortgage, you’re already on the right track. Offset accounts can significantly reduce the interest you pay on your home loan. But here’s a question: Can you make it work even harder for you?
Consider adding any additional savings or windfalls you receive into your offset account. Whether it’s a tax refund, a work bonus, or money saved from cutting unnecessary expenses, depositing these funds into your offset account can substantially reduce the principal amount you owe. Over time, this can lead to significant interest savings and a faster path to mortgage freedom.
Furthermore, think about directing your salary into the offset account. By doing this, you effectively reduce your daily loan balance, ultimately reducing the interest charged on your mortgage. It’s a simple yet powerful way to supercharge your mortgage repayment strategy.
2. Hunt for a Better Interest Rate While Maintaining Your Current Payments
Interest rates can vary among different lenders, and finding a lower rate can make a substantial difference in your mortgage repayment journey. So, the next question is: Can you find a better interest rate with another bank and still pay the same amount you are now?
Here’s how it works: Talk to your broker at Broker Kit. If they can help you look for a lender offering a lower interest rate. If the loans works for your unique situation you could consider refinancing your mortgage – yes your broker will help you do all of this, so don’t stress. After switching, maintain your current repayment amount, if you can afford to. By doing this, you’ll continue to pay down your mortgage at the same pace, but with a reduced interest burden. This means more of your money goes towards reducing the principal, helping you pay off your mortgage faster.
3. Opt for Fortnightly Mortgage Repayments
Did you know that changing the frequency of your mortgage repayments can make a difference in your overall repayment timeline? Instead of making monthly payments, consider switching to fortnightly payments.
Here’s why it works: A year contains 26 fortnights but only 12 months. By dividing your monthly mortgage payment in half and paying it every two weeks, you’ll end up making an extra month’s worth of payments each year. Over time, this extra contribution can shave years off your mortgage term.
In conclusion, paying off your mortgage faster is not just about increasing your repayments. It’s about working smarter with your mortgage. By leveraging an offset account, hunting for a better interest rate, and opting for fortnightly repayments, you can accelerate your journey towards mortgage freedom. So, take these tips on board and watch your mortgage balance shrink faster than you thought possible.
Broker Kit acknowledges the Traditional Custodians of the land on which we operate, live and gather as a team. We recognise their continuing connection to land, water and community. We pay respect to Elders past, present and emerging.
