The onset of the COVID-19 pandemic, has made the majority of Australians re-evaluate their circumstances, and many have been forced to take another look at their financial situation, in an attempt to remain standing on firm ground, even in such unpredictable and uncertain times.
And although fixed and variable rate home loans have their advantages and disadvantages. Many borrowers are still making plans to refinance their loans, most especially since the RBA cash rate has dropped down (holding a cash rate at 0.1%), and it is predicted that mortgage activity will most likely continue to be driven by “refinancing”, even in 2021.
This positive trend in refinancing, shows that a good number of Australians may be wanting to attain the peace of mind of paying of their mortgage quicker, and it is safe to say that this activity suggests that all may not be lost.
There are many ways in which a mortgage can be paid off faster.
Top 5 tips, when aiming to pay off your mortgage quicker!
1. Renegotiation
When the going gets tough it is always wise to renegotiate your interest rate with your lender, and our friendly team at Abacus Finance are more than happy to sit down with you, understand your needs and renegotiate with your lender. In order to help you save money, as you strive to pay of your mortgage quicker.
In the event you haven’t applied for a loan yet, we are ever ready to assist you in finding the best lenders, in accordance to your circumstances.
2. Shorter Terms (Refinance)
Long- term home loans suit the needs of many, but there is no doubt you can also benefit from short term loans, as short term loans will often have less interest, even thou the monthly payment amount might be high.
For example:
Provided that thirty-year mortgages would most likely carry higher rates, than twenty- year mortgages. Your interest and principal payment per month would be around $1,150, (at 3.75% on a term of 30 years) financing a $250,000 loan.
Whereas as the monthly payment would come up to $1,450 (at 3.625% on a term of 20 years) financing the same loan amount of $250,000
Suggesting that you would most likely reap great benefits, when opting for a shorter term loan (20-year term), especially since the interest you would save in such a scenario, would be well over the amount of $60,000.
3. Bi-weekly payments
By paying your mortgage payments biweekly (every two weeks) as opposed to once every month, you will be able to make strides towards paying off your mortgage faster, as doing so will enable you to make one extra payment per year.
4. Redraw Facility
The use of a redraw facility, can help you offset loan interest charges, and save interest, as repayments will then subsequently go towards the redraw balance, and as a result can help you pay off your loan quicker.
By using the redraw facility you will increase the size of your regular repayments, and this could aid you in achieving your goal.
5. Make lump Sum Payments
If you have received dividend payments, an inheritance, or even tax return, you will be eligible to make “lump sum” repayments, and it is interesting to note that you can reduce your loan term, by making lump sum payments in the early stages of your home loan.
This could help you save money on interest, and pay off monthly payments faster.
Don’t get stuck … there are many ways to pay of your mortgage early!
Find about options are available, and how you can pay off your mortgage faster, or even reduce your loan term, depending on your circumstances.
Feel free to call our team at Abacus Finance on 1300 889 743 or email us today! info@abacusfinace.com.au
The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.
