Use these simple tricks and you could save thousands and pay off your mortgage faster
WANT to keep thousands of dollars in your pocket rather than give it to the bank?
New research has revealed nine out of ten Australian borrowers have tried to pay off their home loans faster.
Just maintaining current loan repayment levels every time there is an interest-rate cut can have a significant impact on the life of your loan and how much you end up paying in the long run.
According to finder.com.au there are plenty of other tricks that can save you money and it doesn’t mean going without.
A survey by finder.com.au found that 40 per cent of borrowers made more frequent payments, either fortnightly or weekly instead of monthly.
This change could save more than $77,000 in interest payments on a $375,000 mortgage at 5.5 per cent interest.
Monthly repayments would be $2129 and the total cost of the loan would be $766,515.
Fortnightly repayments would save $77,819 in interest and you would reduce the loan term by five years and one month.
Using an offset account was another popular way to reduce interest payments with a third of borrowers doing this.
Negotiating a cheaper interest rate with an existing lender or refinancing to a new lender could also save substantial money.
Finder.com.au money expert Bessie Hassan said many borrowers were proactive about getting ahead on their home loans.
“Fast-tracking your mortgage repayments and reducing your loan term could save you thousands of dollars in interest over the life of a loan,” she said.
She said paying down a mortgage while interest rates were low could give borrowers a significant buffer against future increases.
Women were more likely (90 per cent) than men (88 per cent) to pay down their mortgage faster.
While Baby Boomers (18 per cent) were twice as likely as Generation X (9 per cent) to have never tried paying off their mortgage faster.
TIPS ON HOW TO PAY OFF YOUR MORTGAGE SOONER
- Make additional repayments
- Make weekly or fortnightly repayments instead of monthly
- Use an offset account
- Round up mortgage repayments so paying more each month
- Negotiate a lower interest rate
Originally published as How to save thousands
