Complete Your Mortgage Payments Sooner with These 4 Strategies

Twenty-five to thirty years seem like a life sentence when you're paying a mortgage. While most people just try to pay it off bit by bit, the truth is that you could pay it off sooner when you approach it strategically. Yes, you could remove chunks off of your home loan by following the tips we have for you. Ready? Let's get started:

  1. Spend your extra money on your mortgage. Received a tax refund? How about a bonus from your boss? While it's tempting to spend all of it on a nice dinner with your family, a better long-term strategy would be to use it to pay your mortgage. Lump sum payments like the ones we mentioned are generally large amounts of money, so imagine how many months or years they could shave off your mortgage.
  2. Maintain your level of payments despite rate cuts. Most people heave a sigh of relief when the RBA announces tax cuts. That is because it means they could make lower payments, which gives them extra funds for their other expenses. However, we suggest that you maintain your level of payments despite these cuts. What happens is that you make "bigger" payments on your mortgage without exactly increasing your expenses.
  3. Reduce your interest with a 100% offset account. Basically, a 100% mortgage offset account is a savings account for your home loan. However, instead of earning interest, the amount of money you have in the account is subtracted from the overall loan value when the loan's interest is calculated. So if you have a loan worth $300,000 and have $100,000 in your offset account, you would only pay interest for the difference of the two, which is $200,000.
  4. Receive your salary through your offset. Another strategy you could use with your offset account is by receiving your salary through it and letting it sit there for a few days. This increases the amount of money in your account whilst having the effect of lowering the interest you have to pay.

These are just few of the strategies you could employ to help you pay off your mortgage sooner. The effect of some may be gradual (such as #4), but it eventually adds up, so they are still worth pursuing. For more information on how you could potentially shave off years from your mortgage payment, talk to our professional advisors at Rate Detective. They will show you what your options are and provide you with comparative rates of the country's top lenders.

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Published on October 10-th, 2012 in Home Loans
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.
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