Managing a home loan is one of life’s big responsibilities, and while it can be a challenge in the current housing market, paying off your home loan faster than planned isn’t impossible. It all comes down to planning, and making simple changes when the opportunity to do so present themselves. Gemma Dale, NAB finance specialist, gives us her advice and ideas for paying off a home loan faster.
Make repayments more often
If you get paid fortnightly, make your mortgage repayments fortnightly too, rather than monthly. It sounds simple but changing your payment frequency to fortnightly can make a huge difference as it will reduce the amount of interest you owe at the end of the month and means you can squeeze in extra repayments each year.
If your minimum repayment is, for example, $2120 a fortnight, why not make it $2200? It doesn’t seem like a lot, but that extra $80 a fortnight could make a big difference to your home loan. An extra $2080 towards your mortgage each year.
Use your pay rise and lump sum payments smartly
The temptation to spend your income or any lump sum payments you receive is huge, particularly if you receive an attractive pay rise. Try putting your salary increase and the lump sum payments, such as a tax return, work bonus, inheritance or dividend payment, straight onto your home loan. You won’t notice the difference and you’ll be paying off your mortgage much faster.
All the advice in this story is general in nature and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.
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