If you are one of the many Australians knuckling down to pay off a mortgage as quickly as possible, these hacks are for you.
Writing an article for The Sydney Morning Herald, financial educator and commentator Nicole Pedersen-McKinnon shares her top tips for paying down a home loan down sooner.
Round up repayments
Look at your mortgage repayment and round it up. As an example, Nicole says if your monthly repayment is $2161, however, you pay $2200, that could shave a year off your mortgage.
Increase your payments
Nicole says paying your mortgage repayments fortnightly instead of monthly can see you getting ahead without much effort.
“Don't ask your lender, whatever you do, to simply switch your repayments to fortnightly – they will adjust the amount so that you're in debt the full 25 or 30 years and so pay them the full whack of interest. You need to figure out yourself what is half, and then simply establish that direct debit.”
Doing so could see you debt free years earlier than you planned.
Set up an offset account
An offset account is a transaction account linked to a home loan. The money you have in this account offsets the amount you owe on that loan, and you'll only be charged the interest on the difference.
"So if you have a $100,000 mortgage and $5000 in an offset, you'll pay interest only on $95,000," writes Nicole.