Here are some tips that will help you be mortgage-free sooner than planned.

Small extra repayments

One of the most obvious ways to pay off your home loan quicker is to make extra repayments. Depositing lump sums, such as a tax return or work bonus, will always be beneficial, however it doesn’t always take large amounts or windfalls to make a substantial difference – planning for regular, small cash injections can have a great impact over the life of a loan.

Let’s say we pay an extra $50 a fortnight on a $500,000 loan, that saves you $32,000 of interest over the life of the loan which in turn will save you just over two years, that’s only $25 a week.

Switch your payment intervals

If you find that you don’t have the discipline to make extra repayments, then simply switching your payment structure can also help save years off your mortgage, as well as simplifying your finances if you are paid fortnightly.

Because there are 12 months in a year but 13 four-week cycles, by switching your payment intervals from monthly to fortnightly, you are essentially paying off an extra month per year

Make sure you have the right type of loan

Ensuring your loan allows extra repayments without penalty will let you make the most of bonuses or funnel small extra payments to reduce the loan principle more quickly, saving on interest immediately, while an offset account will use your savings or living expenses to reduce your principle, while still allowing you to access these funds from a transaction account.

Using your mortgage account as a transaction account can also assist, having your income deposited directly into your mortgage will help reduce the daily interest when the balance is lower. This only works though if you run a household budget as you need to plan ahead.

For a budget tool or further information contact me on 0402 203 303 or rob@rwfs.com.au