10 Simple Ways to Pay Off Your Home Loan Quicker

by Chris Lang on January 20, 2012

Happy home owners

Home loans are inevitably one of the biggest single household investments. We might complain about school fees, car registration costs or the price of milk going up … but in the end, a little lapse of attention to your home loan and the consequences will be far bigger than all of these extra bills put together!
From little things, big things grow … make sure that your money habits are growing a nice little nest egg, instead or watering and fertilising a major debt, with these quick and handy hints for paying off your home loan sooner!

1. Save a bigger deposit
IF the housing market is stable or moving to a buyer’s markets, wait a little and save a bigger deposit before buying your home. This way YOU’RE earning interest on your savings, instead of paying the bank interest.

2. Choose a smaller lender
Big bank interest rates are often more than those for credit unions or smaller lenders. Look far beyond the big four to make significant home loan savings. However, make sure you use the comparison rate in your research as fees are often higher at these institutions.

3. Basic home loans
Bells and whistles on home loans cost money, and in most cases they are under-used. Start off with no bells and whistles – you can easily upgrade if you really need to.

4. Repay weekly or fortnightly
Your bank will give you a monthly repayment figure — split this into two or four to create a fortnightly or weekly repayment figure, and put the cash in more frequently. Because there are usually 4.3 or 4.5 weeks in a month, you end up repaying a little extra without even realising.

5. Interest calculations
To give you the maximum benefit of extra repayments, you should choose a home loan that recalculates interest on a daily basis rather than a monthly basis.

6. Offset account?
An offset facility lets you park money in your home loan account to decrease the interest, then redraw it when you need to. However, the facility usually comes with a higher interest rate tag. Consider putting your extra money into a term deposit instead, and when it reaches your set amount, pull some out and make a lump sum repayment.

7. Use your rental bond
If you’re moving from a rental property to a mortgaged home, use your rental bond immediately to repay some of your home loan. You haven’t seen the money for some time, so you probably won’t miss it!

8. Ignore rate cuts
RBA cuts interest rates? Don’t rush out to the pub – maintain your old level of repayments and you can cut your home loan without missing any money.

9. DIY home loan maintenance
Get to know your internet banking facility for your home loan, and use it to avoid branch visit charges and other fees.

10. Switch away
If it looks like interest rates will be coming down and staying down, think about switching a fixed rate loan to a variable rate home loan. The switching fee can be minimal compared to your savings in interest.

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Written by Andrew Gloyns

Andrew Gloyns works for ratestonline.com.au – an Australian home loans comparison website.

{ 1 comment… read it below or add one }

Homes for sale Mackay January 25, 2012 at 6:55 pm

Switching away for the low interes is one of the good point to cut down every montht extra interest rates, but it will be only possible when we choose the variable rate home loan. It’s the great option to save the money. And thanks to Andrew Gloyns for great information.

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